List of Deductions Available Under the New Tax Regime FY 2024-25
- Rajesh Kumar Kar
- Dec 18, 2025
- 9 min read
The New Tax Regime for FY 2024-25 allows only a limited set of deductions, focusing on simplified taxation under Section 115BAC. Standard deduction of ₹75,000, employer’s NPS contribution, deductions for Agniveer Corpus contributions, family pension relief, home loan interest on let-out property, and savings account interest for eligible taxpayers remain available. Popular tax breaks such as Section 80C investments, Section 80D medical insurance, and HRA exemptions are not permitted. Understanding the allowed deductions helps taxpayers calculate accurate taxable income and choose the most beneficial regime. Platforms such as TaxBuddy guide users in comparing regimes and optimising tax outcomes.
Table of Contents
Understanding the New Tax Regime FY 2024-25
The New Tax Regime introduced under Section 115BAC continues to prioritise lower tax rates with minimal deductions. For FY 2024-25, this regime becomes the default option for most taxpayers, unless a switch is made to the old system. The focus remains on simplifying compliance, reducing dependency on tax-saving investments, and enabling straightforward filing. While the list of permitted deductions is small, each one carries specific conditions and limits that shape the final taxable income. This structure helps taxpayers estimate their actual benefit without navigating multiple exemption categories, especially when the income pattern is uncomplicated.
Is Standard Deduction Allowed in New Tax Regime?
The standard deduction remains one of the most significant benefits under the New Tax Regime, and it continues to apply for FY 2024-25. Salaried individuals and pensioners may claim a flat deduction of ₹75,000, which directly reduces taxable income without requiring any supporting proofs. This deduction plays an important role in improving the attractiveness of the new regime, especially for those who do not have substantial investments or medical insurance policies that would otherwise qualify for tax reductions in the old regime.
List of Deductions Available Under the New Tax Regime FY 2024-25
The permissible deductions under the new system include only a few categories: standard deduction of ₹75,000, employer’s contributions to NPS under Section 80CCD(2), Agniveer Corpus Fund deductions under Section 80CCH, family pension deduction under Section 57(iia), transport allowance for disabled individuals, interest on savings accounts for eligible taxpayers, interest deduction on let-out home property under Section 24(b), and a fixed disability deduction of ₹75,000. These benefits form the core financial levers available to taxpayers who choose the simplified structure.
Standard Deduction of ₹75,000 for Salaried and Pensioners
The enhanced standard deduction of ₹75,000 offers immediate relief to salaried workers and pension recipients. It reduces taxable income without documentation and has become an essential feature of the new regime. This increase helps balance the absence of popular deductions like 80C or 80D. Pensioners, including family pension recipients, benefit significantly as it reduces their overall tax load without complex steps.
Employer NPS Contribution Under Section 80CCD(2)
Employer contributions to the National Pension System remain fully deductible under the New Tax Regime. This deduction can go up to 10% of salary (basic + dearness allowance) for private-sector employees and 14% for central government employees. Since this benefit is over and above the standard deduction, it supports long-term retirement planning while providing an effective tax advantage within the new framework.
Agniveer Corpus Fund Deduction Under Section 80CCH
Section 80CCH provides a dedicated deduction for contributions made to the Agniveer Corpus Fund. Both the Agniveer’s own contributions and the matching contributions made by the Central Government qualify for deduction. This category remains one of the few specific-purpose deductions allowed under the new system and supports the financial welfare of Agniveer personnel enrolled under the Agnipath Scheme.
Family Pension Deduction Under Section 57(iia)
Recipients of family pension may claim a deduction that is the lower of one-third of the pension amount or ₹25,000. This deduction applies even under the New Tax Regime and helps reduce the taxable burden on dependants receiving pension benefits after the demise of a family member. It is applicable regardless of whether other deductions are claimed.
Is Savings Account Interest Deduction Allowed in New Tax Regime?
The deduction for interest earned on savings accounts continues to apply for FY 2024-25 under the new regime. The permitted deduction remains up to ₹10,000 for non-senior citizens and up to ₹50,000 for senior citizens. This relief is particularly important for individuals who rely on interest income or maintain sizeable savings balances. When opening or updating bank accounts, taxpayers may still encounter forms asking about this deduction.
Home Loan Interest Deduction for Let-Out Property Under Section 24(b)
While interest deduction on self-occupied property is not allowed under the new regime, interest on home loans for let-out properties remains permitted. The actual interest paid may be claimed as a deduction from rental income without any upper limit. This helps property owners offset taxable rental income, maintaining some balance within the new regime for those owning investment properties.
Transport Allowance for Persons With Disabilities
Transport allowance for individuals with disabilities is available under the new system and does not require supporting bills. This category ensures continued financial support for mobility expenses and applies irrespective of whether the taxpayer chooses the old or new regime.
Disability Deduction of ₹75,000 Under the New Tax Regime
A flat disability deduction of ₹75,000 is available for eligible individuals, regardless of actual expenses. This applies fully within the New Tax Regime. The higher deduction of ₹1,25,000 applies in cases of severe disability. This provision ensures that persons with disabilities continue to receive financial relief even as most traditional deductions remain unavailable.
Which Popular Deductions Are Not Allowed in the New Tax Regime?
Many widely used deductions from the old regime are absent here. These include tax-saving investments under Section 80C, medical insurance deductions under Section 80D, education loan interest under Section 80E, HRA exemptions, LTA exemptions, and home loan interest deductions for self-occupied property. For taxpayers with considerable investments or high insurance contributions, the absence of these benefits often shifts preference toward the old regime.
New Tax Regime vs Old Tax Regime: Which One Is Better?
The new system offers lower tax rates and minimal documentation, making it suitable for those with fewer investment commitments or minimal deductions. The old regime, though offering higher tax rates, continues to appeal to individuals who depend heavily on 80C, 80D, HRA, NPS self-contributions, and other exemptions. The best choice depends on actual income, investment habits, and long-term financial planning.
Impact of Allowed Deductions When Selecting Your Tax Regime
The few available deductions under the new system simplify calculations and help estimate net taxable income more directly. For individuals without significant tax-saving habits or compliance requirements, the new regime often results in lower tax liability. For others, especially those maximising 80C and 80D benefits, the old regime may continue to offer superior savings. The final choice should be based on a comparative analysis, ideally using a reliable computation platform.
TaxBuddy’s Role in Regime Comparison and Tax Filing
TaxBuddy assists taxpayers by automatically comparing both regimes and identifying the most beneficial structure based on income, deductions, and allowances. Its AI-driven system evaluates scenarios instantly and highlights opportunities for reduced liability. This support removes guesswork, ensuring accurate filing aligned with the taxpayer’s financial situation.
Conclusion
The New Tax Regime limits the number of deductions but continues to offer essential benefits like the standard deduction, employer NPS contribution, and select relief categories. These provisions help maintain balance while promoting simplified tax filing. For complex cases or comparative calculations, technology-backed platforms provide reliable guidance. For anyone looking for assistance in tax filing, it is recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? TaxBuddy provides a choice between self-filing and expert-assisted plans, catering to all types of taxpayers. The self-filing system uses an AI-driven interface that automatically reads Form 16, AIS, and TIS, reducing manual inputs and preventing common errors. Individuals with straightforward income can complete their returns quickly using this guided workflow. For taxpayers with multiple sources of income, capital gains, business earnings, foreign assets, or deductions requiring interpretation, the expert-assisted plan connects them with qualified tax professionals who verify every detail, optimise deductions, and ensure compliance with the latest regulations. This dual approach allows users to select a method that suits their comfort and complexity level.
Q2. Which is the best site to file ITR? The official portal of the Income Tax Department remains the primary platform for e-filing for all taxpayers. It is ideal for those familiar with form structures and tax rules. However, individuals who prefer a smoother process often choose AI-assisted platforms such as TaxBuddy. These platforms simplify calculations, read financial documents automatically, and offer expert checks to avoid mismatches or incorrect claims. They also provide customer support, tax planning suggestions, and filing convenience through mobile apps, making them a reliable alternative for hassle-free filing.
Q3. Where to file an income tax return? Income tax returns can be filed directly on the government’s e-filing portal or through approved third-party platforms offering automated filing and expert review services. While the government portal provides a comprehensive filing environment, private platforms enhance the experience by simplifying data entry, preventing errors, and offering one-on-one support. Many taxpayers choose these platforms to save time, reduce mistakes, and ensure that the correct tax regime is applied.
Q4. Which deductions can be claimed under the New Tax Regime FY 2024-25? The New Tax Regime permits only a restricted group of deductions. These include the ₹75,000 standard deduction for salaried and pensioned individuals, employer’s NPS contributions under Section 80CCD(2), deductions for contributions to the Agniveer Corpus Fund, family pension relief under Section 57(iia), savings interest deduction for eligible citizens, transport allowance for persons with disabilities, the disability deduction of ₹75,000 or ₹1,25,000 depending on the severity, and home loan interest deduction for let-out property. All other major Chapter VIA deductions remain discontinued under this regime.
Q5. Is the standard deduction available in the New Tax Regime? Yes. The New Tax Regime continues to offer the standard deduction, and for FY 2024-25, it has been enhanced to ₹75,000. This benefit applies to salaried individuals and pensioners alike. Since it requires no documentation, it remains one of the most beneficial and accessible deductions under the new system, helping to reduce overall taxable income without additional compliance steps.
Q6. Can deductions be claimed on bank savings interest under the New Tax Regime? The savings account interest deduction continues to apply in the new system. Non-senior citizens may claim up to ₹10,000, while senior citizens may claim up to ₹50,000 of interest earned on savings accounts. This deduction is relevant for those maintaining active bank balances or earning modest interest income. Banks may still ask for details of interest deductions during account opening or periodic compliance checks.
Q7. Are tax-saving investments under Section 80C allowed in the New Tax Regime? No. Investments made under Section 80C—such as PPF, ELSS, life insurance premiums, Sukanya Samriddhi deposits, and provident fund contributions—do not qualify for deductions under the New Tax Regime. This is one of the most significant differences between the two systems. Individuals relying heavily on Section 80C benefits often find the old regime more advantageous.
Q8. Is medical insurance deduction under Section 80D allowed in the New Tax Regime? No. Deductions for health insurance premiums, preventive health check-ups, and payments made for parents' medical insurance under Section 80D are not available in the new regime. This applies to both individual and family coverage plans. Taxpayers who depend strongly on 80D deductions generally receive better tax outcomes under the old system.
Q9. Is HRA exemption permitted under the New Tax Regime? HRA exemption is not available under the New Tax Regime. Employees receiving House Rent Allowance cannot reduce their taxable income by claiming rent payments in this system. Since HRA is one of the most widely claimed exemptions, this restriction significantly affects salaried individuals living in rented accommodation who may benefit more from staying under the old regime.
Q10. Can home loan interest be claimed under the New Tax Regime? Interest on self-occupied property is not deductible under the new regime. However, interest paid on loans for let-out properties is fully deductible from rental income without a specified upper limit. This provision continues to benefit taxpayers who own rental properties and helps reduce their taxable rental income.
Q11. For whom is the New Tax Regime more beneficial? The new system is generally more favourable for individuals with straightforward income structures and minimal investments or insurance-based deductions. Salaried employees without HRA benefits, taxpayers unable to utilise 80C or 80D fully, and those preferring lower tax rates with fewer compliance steps often gain more under this regime. On the other hand, individuals who heavily invest in tax-saving instruments or maintain high insurance commitments may save more under the old regime.
Q12. How can TaxBuddy help in choosing between the Old and New Tax Regime? TaxBuddy evaluates both regimes using AI-powered calculators that analyse salary breakups, deductions, allowances, and investment patterns. It identifies the more tax-efficient option based on the user’s financial profile. The platform also ensures accurate filing by cross-checking data with Form 16, AIS, and TIS, helping prevent mismatches and post-filing notices. For users with complex income structures, TaxBuddy’s expert-assisted plan provides human guidance to ensure compliance and maximise tax savings.
