New Tax Regime Deductions You Can Still Claim
The new regime removes most deductions but not all. Here are the deductions you can still claim — including standard deduction, employer NPS, and family pension relief.
All figures and facts in this article are sourced directly from primary government and regulatory publications — including the Reserve Bank of India, SEBI, EPFO, the Income Tax Department, PFRDA, and IRDAI — and verified before publication. No claim is published from a single source without corroboration.
What the new regime removes — and what it keeps
When people say "the new tax regime has no deductions," they are mostly right, but not entirely. The new regime under Section 115BAC strips out the bulk of Chapter VI-A deductions and most salary exemptions — but a handful remain, and some of them are significant.
Knowing exactly what you can still claim prevents you from leaving money on the table.
Deductions and exemptions available in the new tax regime
1. Standard deduction — ₹75,000
From FY 2024-25, salaried employees and pensioners can claim a standard deduction of ₹75,000 under the new regime. This was introduced by Budget 2024 (increased from ₹50,000 in earlier years).
For a salaried employee, this means ₹75,000 is automatically deducted from gross salary before applying the slabs. Combined with the ₹12L Section 87A rebate threshold, it results in zero tax for gross income up to ₹12,75,000.
This is available under the proviso to Section 16(ia) of the Income Tax Act, as amended by the Finance Act 2024.
2. Employer NPS contribution — Section 80CCD(2)
The deduction for your employer's contribution to your National Pension System (NPS) account is available under both regimes. Under the new regime, the limit is:
- 14% of basic salary for private sector employees (increased from 10% in Budget 2024)
- 14% of basic salary for central government employees
This is a meaningful deduction if your employer contributes to NPS. For someone with a ₹10L basic salary, the employer can contribute ₹1.4L annually — reducing taxable income by ₹1.4L. The NPS contribution structure is governed by the PFRDA (National Pension System) Regulations.
Note: your own NPS contribution (80CCD(1B)) is not available as a deduction under the new regime.
3. Standard deduction for family pension
If you receive a family pension (pension paid to a family member after a government employee's death), you can claim a standard deduction equal to one-third of the pension amount or ₹25,000, whichever is lower.
This applies under the new regime per the proviso to Section 57(iia) of the Income Tax Act.
4. Transport allowance for specially-abled employees
Employees with disabilities who receive a transport allowance from their employer can claim an exemption of ₹3,200 per month (₹38,400 annually) under Section 10(14). This exemption is available under the new regime.
5. Conveyance and travel reimbursements for work
Actual expenditure on conveyance or travel reimbursed by the employer for official duties is exempt under Section 10(14) and available under the new regime. This applies only when the expense is actually incurred for office work and is reimbursed — not a fixed allowance.
6. Voluntary Retirement Scheme gratuity and leave encashment
Gratuity received on retirement or death (up to ₹20L under Section 10(10)) and leave encashment on retirement (up to ₹25L under Section 10(10AA)) are available as exemptions in the new regime. These are one-time receipts, not annual deductions.
7. Agniveer Corpus Fund — Section 80CCH
From FY 2023-24, contributions to the Agniveer Corpus Fund under the Agnipath Scheme (both employee and government contributions) are fully deductible under Section 80CCH. This deduction is available under the new regime.
What is definitively NOT available
To be clear, these major deductions are unavailable in the new regime:
- HRA exemption under Section 10(13A)
- 80C investments — PPF, ELSS, LIC, EPF (own contribution), home loan principal, tuition fees, NSC
- 80D health insurance premiums
- Section 24(b) home loan interest on self-occupied property
- LTA (Leave Travel Allowance)
- Professional tax deduction under Section 16(iii)
- 80E education loan interest
- 80G donations
- 80TTA/80TTB interest income deductions for savings accounts
- Your own NPS contribution under 80CCD(1) and 80CCD(1B)
The complete list of excluded deductions is in CBDT Circular No. 4/2023, which employers use to determine TDS.
Practical implication: the employer NPS advantage
The employer NPS contribution (80CCD(2)) is the one deduction with real planning flexibility under the new regime. If your employer offers a flexible compensation structure, you can structure part of your salary as employer NPS contribution — reducing taxable income by up to 14% of basic salary while the employer's total cost remains similar.
This requires coordination with your employer and is more easily done in CTC-based compensation structures. If your employer contributes, say, ₹2L to your NPS annually, your taxable income under the new regime drops by ₹2L — saving ₹30,000–40,000 depending on your slab.
Should you still choose the new regime?
Even with the limited deductions, the new regime is better for most people earning below ₹12.75 lakh (zero tax) and for those with minimal additional deductions above the standard deduction. For a precise comparison with your deductions, use the [old vs new tax regime calculator](/tools/tax-regime-calculator).
Sources
Content on Ek Crore is for educational purposes only. Nothing here is financial advice. Always consult a SEBI-registered advisor, CA, or qualified professional before making investment or tax decisions.