Some of the Important Deductions Available in the New Tax Regime 

There are 70 exemptions and deductions that were removed from the new income regime for individual taxpayers. The excluded exemptions include 80 C deductions up to Rs 1.5 lakh, medical insurance premium u/s 80D, etc.  But there are some exemptions that a taxpayer  can claim in the new tax regime. And if you are feeling confused between the ones that are removed and the ones that are available then here is a quick rundown of the some of the important valid available deductions in the new regime.

Read more
Best Tax Saving Plans
  • High Returns

    Get Returns as high as 15%*
  • Zero Capital Gains tax

    unlike 10% in Mutual Funds
  • Save upto Rs 46,800

    in Tax under section 80 C

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Get Instant Tax Receipts
Save upto ₹46,800 in Taxes Under Section 80C
+91
View Plans
Please wait. We Are Processing..
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company Tax benefit is subject to changes in tax laws
Get Updates on WhatsApp

Checkout some of the permissible exemptions under the new tax regime as proposed in the Union Budget 2020:

Contribution By Employer Towards’ Employees NPS/EPF Account

For the FY 2020-21, the employer’s contributions towards superannuation, EPF, NPS is available for tax exemption up to a maximum limit of Rs. 7.5 lakh. And the interest earned will be taxable in the hands of an employee.

Currently, the employer’s contribution towards EPF remains 12% of the employee’s basic salary.  In the same way, an employer’s contributions towards Tier-I account of NPS remains 10% of the employee's basic salary. Whereas in a superannuation account, a maximum of Rs. 1.5 lakh employer’s contribution is exempted from tax during a financial year.

People earning less than Rs. 60 lakh a year are likely to benefit from this as they will not cross the exemption limit of Rs. 7.5 lakh.

Interest on Employee’s Provident Fund up to 9.5%

In the new tax structure, if the interest earned during a year on the EPF scheme does not exceed the limit of 9.5% you can avail tax exemption benefits.

Gratuity

All the taxpayers that receive gratuity (on working for more than 5 years) from their employer can avail tax exemption up to a specified limit. The tax exemption limit for gratuity in a lifetime is kept at Rs. 20 lakhs for non-government employees. There is no limit for government employees.

In the new regime, the gratuity amount that is received on the death of an employee shall be available for tax exemption with no limits.

Interest Earned on Post Office Savings Account Balances

Under the purview of section 10(15) (i) of the IT Act, a person can avail tax benefit on the interest earned up to a specified limit. In the case of individual accounts, the tax exemption limit of the Interest earned is up to Rs. 3,500 and Rs. 7,000 for joint accounts.

However, in the new tax structure, the interest received from the bank and post office savings account is not valid for deduction u/s 80 TTA. However, only post office savings account holders can still avail exemption up to a certain extent.  If you are availing this exemption you can derive your gross taxable income by deducting the interest earned under the head other sources.

Life Insurance Maturity Amount

In the new tax regime, a taxpayer cannot avail of a tax deduction on the life insurance premium. However, the maturity amount that a taxpayer receives from a life insurance company is exempted u/s section 10(10D) in the new tax regime.

PPF & Sukanya Samriddhi Account Interest and Maturity Amount

Under the new tax regime, PPF contributions are not eligible for tax deductions u/s 80 C. The interest earned and the maturity amount of the PPF Account and Sukanya Samridhi Yojana will be eligible for tax exemption under the new tax regime.

Payment Received from National Pension Scheme

Even in the new regime, the lump sum maturity amount received from the National Pension Scheme will be eligible for tax exemption.

In the new tax regime, a maximum of 60% of the NPS corpus can be withdrawn and is tax-free on Tier- I NPS account on maturity. However, it is mandatory to use the 40% remaining corpus amount on maturity for buying annuity plans. Also, any partial withdrawals remain exempted from tax.

And as per the current Income tax regime of 2019-2020, an individual can avail tax exemption benefits upon withdrawal of a maximum of 25 % of his own NPS contribution amount. For own contributions, an individual can avail tax benefits up to Rs. 1.5 lakh u/s 80CCD (1) and Rs. 50,000 u/s 80CCD (1B).

The new tax regime does not offer tax benefit on the employee's own contribution but if it an employer’s contribution to the employee’s account, it is eligible for deduction u/s 80CCD (2). Furthermore, partial withdrawals up to a limit and the payment received from the National Pension Scheme at the time of closure are exempted from tax in the new regime.

Leave Encashment on Retirement

Many companies encash the unused leaves at the time of retirement of their employees. The limit to avail tax benefits for leave encashment by non-government employees is up to Rs. 3 lakh. Even in the new regime, a taxpayer will continue to avail of tax exemption for the same.

Voluntary Retirement Scheme Amount

As per the new regime if a taxpayer opts for voluntary retirement then the monetary benefits by him are eligible for tax exemption. The maximum limit is up to Rs 5 lakh in both the current and the new tax structure.

Tax Saving Investment
Save Tax Under Section 80C

Income Tax articles

Recent Articles
Popular Articles
Income Tax Above 10 Lakh

10 Jun 2022

Every year on the 1st of February, the Government of India...
Read more
Investment Declaration with Form 12BB

08 Jun 2022

Tax planning is vital for salaried individuals to streamline...
Read more
NPS Tax Savings

08 Jun 2022

NPS or National Pension Scheme is a voluntary pension plan...
Read more
How is Short-Term Capital Gains Tax Calculated on Shares?

08 Jun 2022

Any property or security in your name is a capital asset for...
Read more
How to Save TDS on Interest with Form 15G and 15H?

08 Jun 2022

Fixed deposits are the safest investment vehicles for most...
Read more
Tax Saving Investments
Tax Saving Investments are an integral part of one’s life as they offer tax deductions under section 80C or...
Read more
Income Tax Above 5 Lakh
Income tax is the tax levied on the income earned by an individual through any source and hence is taxable in the...
Read more
Cost Inflation Index
We all have read in the school books, never took it seriously as a child, and now it has become the most...
Read more
Gratuity Eligibility Before and After Completion of 5 Years
An employee is a person who is hired by an organization to work in a specific field that they have expertise in...
Read more
SBI PPF Calculator
Public Provident Fund or PPF is a complete Government-backed investment scheme offered to all individuals, both...
Read more
top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL