Starting FY 2025–26, the new tax regime has become the default choice for most salaried individuals & pensioners. It offers wider tax slabs, lower rates, and a higher rebate limit of ₹12 lakh. While it skips most traditional exemptions, some powerful income tax deductions are still allowed.
Here’s what you can still claim under the new regime.
1. Corporate NPS Contribution (Section 80CCD(2))
While individual contributions to the National Pension System under Sections 80C and 80CCD(1B) are not available under the new regime, employer contributions to NPS are still tax-deductible.
Under Section 80CCD(2), an employer’s contribution of up to 14% of basic salary plus dearness allowance (for central government employees; 10% for others) is fully deductible.
💡 For example, if your basic DA is ₹6 lakh, & your employer contributes ₹60,000 to NPS, this amount reduces your taxable income.
However, remember: The total tax-free amount from employer's NPS, EPF, and superannuation fund contributions is capped at ₹7.5 lakh per year.
2. Interest on Home Loan for Let-Out Property
You cannot claim ₹2 lakh deduction on self-occupied house property under the new regime. But the interest on home loans for let-out properties is still deductible.
You can subtract the interest paid on the housing loan from the rental income received, helping lower your overall taxable income.
⚠️ Note: In the new regime, if the property shows a loss (i.e., interest paid > rental income), the loss can only be set off against income from other house property, not salary or business income. The balance can be carried forward for up to 8 years.
Also Read: Leave Travel Allowance (LTA) - Save Tax on Travel the Right Way!
3. Employer’s EPF Contribution (Up to 12%)
The employer’s contribution to your EPF account — up to 12% of your basic salary — remains tax-free.
This contribution also falls under the ₹7.5 lakh ceiling, which includes NPS & other retirement-related employer contributions.
So, if you're planning for retirement while staying tax-efficient, this is one of the few deductions under new tax regime you can still use."
4. Tax-Free Payments Still Allowed (Subject to Conditions)
Even under the simplified regime, these payments remain exempt if conditions are met:
- Gratuity payout
- Leave encashment
- Maturity proceeds from life insurance policies (as per Section 10(10D))
These are not “deductions” you can claim, but they are tax-exempt income, making them beneficial in retirement & exit scenarios.
Summary
Despite being marketed as “no exemptions,” the new tax regime still gives you a few ways to reduce your tax liability — if used smartly.
Here’s a recap of what you can still claim:
|
Tax Benefit |
Still Available Under New Regime? |
|
Corporate NPS (80CCD(2)) |
✅ Yes |
|
Employer’s EPF (up to 12%) |
✅ Yes |
|
Home loan interest on let-out property |
✅ Yes |
|
Gratuity/Leave encashment/Life insurance maturity |
✅ Yes (if conditions met) |
|
Section 80C / 80D / 80E deductions |
❌ No |
|
HRA / LTA / Standard Deduction |
❌ No |
Also Read: HRA Demystified: A Salary Perk That Doubles as a Tax Shield
These benefits are especially valuable if you’re looking for high return, long term investment options, or thinking how to invest money in bank with low tax outgo."
👉 Need help deciding whether the old or new tax regime is better for you?
Let our experts at Callmyca.com help you choose the most tax-efficient plan for your income, investments, & future goals.
