Can I claim Section 80C deductions in the new tax regime?

No, the new tax regime does not allow any deductions under Section 80C. This means you cannot claim deductions for investments in schemes like PPF, NSC, ELSS, or life insurance premiums. If you wish to benefit from these deductions, you will need to opt for the old tax regime.

Is HRA exemption allowed under the new tax regime?

No, House Rent Allowance (HRA) exemptions are not available under the new tax regime. If you receive HRA as part of your salary, you will not be able to claim an exemption for the rent paid under the new regime. This benefit is only available under the old tax regime.

How does the new tax regime impact health insurance deductions?

Under the new tax regime, deductions for health insurance premiums under Section 80D are not allowed. This means that you cannot claim a deduction for premiums paid for yourself, family, or parents under the new tax regime.

Are there any deductions for home loan interest in the new tax regime?

No, the deduction for interest paid on home loans under Section 24 (up to ₹2 lakh) is not available under the new tax regime. Taxpayers who have taken a home loan and are paying interest will lose this deduction if they opt for the new regime.

Is education loan interest still deductible under the new tax regime?

No, under the new tax regime, the deduction for interest paid on education loans under Section 80E is not available. If you are repaying an education loan, you will not be able to claim this benefit in the new tax regime.

Can I still claim donations under Section 80G in the new tax regime?

No, deductions for donations to charitable institutions under Section 80G are not available in the new tax regime. If you want to claim deductions for charitable donations, you will need to opt for the old tax regime.

What is the standard deduction available in the new tax regime?

The standard deduction in the new tax regime is ₹75,000 for salaried individuals from FY 2024-25 onwards. This is an increase from ₹50,000 available in FY 2023-24. However, this is the only major deduction available under the new regime.

Are there any allowances still available under the new tax regime?

Yes, while most allowances and deductions have been removed, a few are still available under the new tax regime. These include the standard deduction, employer’s contribution to the National Pension Scheme (up to 14% of salary), and transport allowance for specially-abled persons (with limited scope).

How does the new tax regime compare with the old tax regime in terms of deductions?

The new tax regime offers lower tax rates but removes most traditional deductions and exemptions that are available in the old regime. This includes popular deductions such as those under Section 80C, HRA, and LTA. The new regime is beneficial for individuals who do not claim many deductions or prefer a simpler tax calculation process.

Are all exemptions from the old tax regime removed in the new one?

Not all exemptions from the old tax regime are removed in the new one. Some exemptions, such as the standard deduction and employer’s contribution to NPS, are still available. However, the new tax regime eliminates most deductions and exemptions related to investments, insurance, rent, education, and donations.

What is the impact of choosing the new tax regime for salaried employees?

For salaried employees, opting for the new tax regime means they will not be able to claim deductions like HRA, LTA, and health insurance premiums. However, they will benefit from lower tax rates. The new regime is more beneficial for those with fewer deductions and who prefer a simplified tax calculation process.

Can I switch between the old and new tax regimes each year?

Yes, taxpayers can switch between the old and new tax regimes each year. This gives you the flexibility to choose the tax regime that works best for you based on your income and available deductions in a given year. However, it’s important to evaluate the impact of this choice before making a decision.

Which Deductions Are Not Available in the New Tax Regime for FY 2024-25 and FY 2025-26?

PRITI SIRDESHMUKH
Apr 29
8 min read

The new tax regime, introduced under Section 115BAC of the Income Tax Act, 1961, aims to simplify the tax process with lower tax rates. However, this simplicity comes at the cost of several key deductions and exemptions that were previously available under the old tax regime. Understanding which deductions are no longer applicable is essential for making informed tax decisions. In this blog, we explore the deductions that are unavailable in the new regime for the financial years 2024-25 and 2025-26, ensuring you are well-prepared for the upcoming changes.

Which Deductions Are Not Available in the New Tax Regime?

Is Section 80C Deduction Allowed in the New Tax Regime?

Is Health Insurance Deduction (Section 80D) Allowed in the New Tax Regime?

Is House Rent Allowance (HRA) Allowed in the New Tax Regime?

Is Leave Travel Allowance (LTA) Allowed in the New Tax Regime?

Is Deduction for Interest on Housing Loan (Section 24) Allowed in the New Tax Regime?

Is Education Loan Interest Deduction (Section 80E) Allowed in the New Tax Regime?

Is Donation Deduction (Section 80G) Allowed in the New Tax Regime?

Is Savings Bank Interest Deduction (Section 80TTA/80TTB) Allowed in the New Tax Regime?

Other Deductions Not Available in the New Tax Regime

Deductions Still Available in the New Tax Regime

Summary Table: Major Deductions Not Available Under New Tax Regime

Conclusion

FAQs

Which Deductions Are Not Available in the New Tax Regime?

Under the new tax regime, several deductions that were previously available in the old regime are no longer applicable. These include popular deductions such as those under Section 80C, 80D, HRA, and more. Taxpayers who opt for the new regime must be aware of these limitations when filing income tax returns.

Is Section 80C Deduction Allowed in the New Tax Regime?

Section 80C is one of the most widely used tax-saving provisions in the old tax regime, allowing taxpayers to claim deductions of up to ₹1.5 lakh on investments in various instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Life Insurance Premiums, Employee Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), and home loan principal repayment. However, under the new tax regime, these deductions are not available. This is a significant change, especially for taxpayers who frequently rely on Section 80C investments to reduce their taxable income. The removal of this deduction means that those opting for the new tax regime cannot benefit from these popular tax-saving options, making it less beneficial for those with substantial investments in these schemes.

Is Health Insurance Deduction (Section 80D) Allowed in the New Tax Regime?

Section 80D offers deductions for premiums paid on health insurance for self, family, and parents. This includes premiums for policies covering the taxpayer, their spouse, children, and parents. Under the old tax regime, these deductions were a great way to reduce taxable income. However, the new tax regime does not allow the deduction for health insurance premiums under Section 80D. This change eliminates an important benefit for taxpayers who prioritize healthcare coverage, particularly for senior citizens who may have higher premiums. As a result, individuals opting for the new regime must consider other ways to manage their healthcare expenses.

Is House Rent Allowance (HRA) Allowed in the New Tax Regime?

House Rent Allowance (HRA) is a common allowance provided to salaried individuals to help cover their rental expenses. Under the old tax regime, taxpayers could claim exemptions on HRA based on the actual rent paid and their salary. This allowed individuals living in rented accommodations to reduce their taxable income. However, under the new tax regime, HRA exemptions are not available. This means that individuals who rely on HRA for tax savings will lose this benefit if they opt for the new regime. As a result, the new regime may not be advantageous for those paying significant rent.

Is Leave Travel Allowance (LTA) Allowed in the New Tax Regime?

Leave Travel Allowance (LTA) provides tax exemptions for travel expenses incurred during leave within India. Under the old tax regime, taxpayers could claim LTA exemptions based on actual expenses incurred for travel within India. However, in the new tax regime, LTA exemptions are not available. This change removes a key benefit for employees who frequently travel for vacations or personal reasons, as they will no longer be able to claim a tax deduction for travel expenses. This makes the new tax regime less favorable for individuals who frequently claim LTA.

Is Deduction for Interest on Housing Loan (Section 24) Allowed in the New Tax Regime?

Under Section 24 of the Income Tax Act, taxpayers can claim a deduction of up to ₹2 lakh on the interest paid on housing loans for self-occupied property. This deduction is particularly beneficial for homeowners who have taken loans for purchasing or constructing a house. However, in the new tax regime, this deduction is not available. As a result, taxpayers who are paying interest on their home loans will lose out on this significant tax benefit if they opt for the new regime. This makes the new regime less attractive for homebuyers who are servicing a housing loan.

Is Education Loan Interest Deduction (Section 80E) Allowed in the New Tax Regime?

Section 80E allows a deduction on the interest paid on education loans taken for higher studies. This deduction is available without any upper limit, and it applies to loans taken for self, spouse, or children. While this deduction has been a great relief for individuals paying interest on education loans, under the new tax regime, this deduction is not available. This change can negatively impact taxpayers who are repaying education loans, as they will not be able to reduce their taxable income through this benefit if they opt for the new regime.

Is Donation Deduction (Section 80G) Allowed in the New Tax Regime?

Donations made to specified charitable institutions are eligible for deductions under Section 80G. This allows taxpayers to contribute to charitable causes while reducing their taxable income. However, under the new tax regime, donations are not eligible for deductions. This change removes an important incentive for philanthropic individuals who want to support charitable organizations while saving on taxes. Without this deduction, individuals making charitable donations will not benefit from tax relief under the new tax regime.

Is Savings Bank Interest Deduction (Section 80TTA/80TTB) Allowed in the New Tax Regime?

Under Section 80TTA, individuals can claim a deduction of up to ₹10,000 on interest income earned from savings bank accounts. For senior citizens, this deduction increases to ₹50,000 under Section 80TTB. However, in the new tax regime, this deduction is not available. This change eliminates a tax-saving option for individuals who earn interest from savings accounts, making the new tax regime less beneficial for those with significant savings interest income.

Other Deductions Not Available in the New Tax Regime

In addition to the deductions mentioned above, several other allowances and deductions are also removed under the new tax regime. These include:

Entertainment allowance: Previously available to salaried individuals, but no longer allowed.
Professional tax: No longer available as a deduction in the new regime.
Income from house property loss set-off: Losses from house property can no longer be set off against other heads of income.
Certain allowances: For example, children's education allowance and transport allowance for specially-abled persons (except a few specific exemptions) are also not available.

Deductions Still Available in the New Tax Regime

While most deductions are removed, a few still remain. These include:

Standard deduction: The standard deduction for salaried individuals has been increased to ₹75,000 for FY 2024-25.
Employer's contribution to NPS: The employer’s contribution to the National Pension Scheme (up to 14% of salary) is still allowed.
Transport allowance for specially-abled persons: A limited allowance remains available.
Other minor allowances: Certain other allowances as specified under the new regime remain applicable.

Summary Table: Major Deductions Not Available Under New Tax Regime

Deduction/Exemption	Available in Old Regime	Available in New Regime
Section 80C (PPF, NSC, ELSS, Life Insurance)	Yes	No
Section 80D (Health Insurance Premium)	Yes	No
House Rent Allowance (HRA)	Yes	No
Leave Travel Allowance (LTA)	Yes	No
Interest on Housing Loan (Section 24)	Yes	No
Section 80E (Education Loan Interest)	Yes	No
Section 80G (Donations)	Yes	No
Section 80TTA/80TTB (Savings Bank Interest)	Yes	No
Entertainment Allowance	Yes	No
Professional Tax	Yes	No
Income from House Property Loss Set-Off	Yes	No

Conclusion

The new tax regime simplifies tax calculations but significantly limits the availability of deductions. Taxpayers should carefully consider these changes when making their decision to opt for the new tax structure. Understanding the specific deductions unavailable under the new regime will help ensure more accurate tax planning for the years ahead.

FAQs

Can I claim Section 80C deductions in the new tax regime?
No, the new tax regime does not allow any deductions under Section 80C. This means you cannot claim deductions for investments in schemes like PPF, NSC, ELSS, or life insurance premiums. If you wish to benefit from these deductions, you will need to opt for the old tax regime.
Is HRA exemption allowed under the new tax regime?
No, House Rent Allowance (HRA) exemptions are not available under the new tax regime. If you receive HRA as part of your salary, you will not be able to claim an exemption for the rent paid under the new regime. This benefit is only available under the old tax regime.
How does the new tax regime impact health insurance deductions?
Under the new tax regime, deductions for health insurance premiums under Section 80D are not allowed. This means that you cannot claim a deduction for premiums paid for yourself, family, or parents under the new tax regime.
Are there any deductions for home loan interest in the new tax regime?
No, the deduction for interest paid on home loans under Section 24 (up to ₹2 lakh) is not available under the new tax regime. Taxpayers who have taken a home loan and are paying interest will lose this deduction if they opt for the new regime.
Is education loan interest still deductible under the new tax regime?
No, under the new tax regime, the deduction for interest paid on education loans under Section 80E is not available. If you are repaying an education loan, you will not be able to claim this benefit in the new tax regime.
Can I still claim donations under Section 80G in the new tax regime? No, deductions for donations to charitable institutions under Section 80G are not available in the new tax regime. If you want to claim deductions for charitable donations, you will need to opt for the old tax regime.
What is the standard deduction available in the new tax regime?
The standard deduction in the new tax regime is ₹75,000 for salaried individuals from FY 2024-25 onwards. This is an increase from ₹50,000 available in FY 2023-24. However, this is the only major deduction available under the new regime.
Are there any allowances still available under the new tax regime?
Yes, while most allowances and deductions have been removed, a few are still available under the new tax regime. These include the standard deduction, employer’s contribution to the National Pension Scheme (up to 14% of salary), and transport allowance for specially-abled persons (with limited scope).
How does the new tax regime compare with the old tax regime in terms of deductions?
The new tax regime offers lower tax rates but removes most traditional deductions and exemptions that are available in the old regime. This includes popular deductions such as those under Section 80C, HRA, and LTA. The new regime is beneficial for individuals who do not claim many deductions or prefer a simpler tax calculation process.
Are all exemptions from the old tax regime removed in the new one?
Not all exemptions from the old tax regime are removed in the new one. Some exemptions, such as the standard deduction and employer’s contribution to NPS, are still available. However, the new tax regime eliminates most deductions and exemptions related to investments, insurance, rent, education, and donations.
What is the impact of choosing the new tax regime for salaried employees?
For salaried employees, opting for the new tax regime means they will not be able to claim deductions like HRA, LTA, and health insurance premiums. However, they will benefit from lower tax rates. The new regime is more beneficial for those with fewer deductions and who prefer a simplified tax calculation process.
Can I switch between the old and new tax regimes each year?
Yes, taxpayers can switch between the old and new tax regimes each year. This gives you the flexibility to choose the tax regime that works best for you based on your income and available deductions in a given year. However, it’s important to evaluate the impact of this choice before making a decision.