Section 115BAC of the Income Tax Act introduced a new tax regime offering concessional tax slabs in exchange for fewer deductions and exemptions. Effective from FY 2023-24, this regime is now the default for individuals and Hindu Undivided Families (HUFs). However, taxpayers can still choose the old regime by filing Form 10-IEA before the due date of income tax return.
Understanding the
new tax regime exemption list is crucial for effective tax planning. Here’s a complete breakdown of what’s allowed, what's not, and how to benefit under this structure.
New Tax Regime Exemption List Highlights
| Feature | Details |
|---|
| Applicable Section | 115BAC |
| Applicable From | FY 2020-21 (Revised in FY 2023-24 and FY 2024-25) |
| Default Regime | Yes (from FY 2023-24) |
| Option to switch | Allowed via Form 10-IEA (before ITR due date) |
| Rebates | ₹25,000 (FY 2024-25), ₹60,000 (FY 2025-26) |
| Slab Rates | Concessional (Up to 30%) |
| Deductions allowed | Very limited |
What is Allowed Under New Tax Regime?
Though most exemptions are removed, some key deductions and allowances are still permitted under the new tax regime:
- Standard Deduction: ₹50,000 (Allowed from FY 2023-24 onwards)
- EPF (Employer Contribution): Deduction on employer’s contribution (within limits under Section 80CCD(2))
- NPS (Employer Contribution): Under Section 80CCD(2), not individual contribution
- Agniveer Corpus Fund Contribution: Deduction allowed
- Gratuity & Leave Encashment: Tax-free to the specified limit
- Retrenchment Compensation & VRS: Exempted as per limits
- Commutation of Pension: Partially exempt
- Voluntary Retirement: As per existing limits
- Interest from Savings Account: Up to ₹40,000 (for senior citizens)
- Transport Allowance for Disabled: Exempt
Not Allowed Deductions and Exemptions
Many commonly claimed deductions under the old tax regime are not available under the new system:
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Section 80C (Investments like PPF, LIC, ELSS, etc.)
- Section 80D (Health Insurance Premiums)
- Home Loan Interest (Section 24 for self-occupied property)
- Section 80G (Donations)
- Education Loan Interest (Section 80E)
- Savings Account Interest (Section 80TTA/TTB for non-senior citizens)
Revised Slabs Under New Tax Regime (FY 2025-26)
| Income Slab | Tax Rate |
|---|
| Up to ₹4 lakh | NIL |
| ₹4 lakh - ₹8 lakh | 5% |
| ₹8 lakh - ₹12 lakh | 10% |
| ₹12 lakh - ₹16 lakh | 15% |
| ₹16 lakh - ₹20 lakh | 20% |
| ₹20 lakh - ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Note: Rebate of ₹60,000 applicable if income is up to ₹7 lakh.
For more details, update and PDF form, visit Income Tax Department Government of India official website
https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-1Old and New Tax Regime Difference
| Income Slabs | Old Tax Regime (FY 2024-25) | New Tax Regime (FY 2024-25) |
|---|
| Age < 60 years & NRIs | Age 60–80 years | Age > 80 years |
|---|
| Up to ₹2.5 lakhs | NIL | NIL | NIL | NIL |
| ₹2.5 lakhs – ₹3 lakhs | 5% | NIL | NIL | NIL |
| ₹3 lakhs – ₹5 lakhs | 5% | 5% | NIL | 5% |
| ₹5 lakhs – ₹6 lakhs | 20% | 20% | 20% | 5% |
| ₹6 lakhs – ₹7 lakhs | 20% | 20% | 20% | 5% |
| ₹7 lakhs – ₹7.5 lakhs | 20% | 20% | 20% | 10% |
| ₹7.5 lakhs – ₹9 lakhs | 20% | 20% | 20% | 10% |
| ₹9 lakhs – ₹10 lakhs | 20% | 20% | 20% | 10% |
| ₹10 lakhs – ₹12 lakhs | 30% | 30% | 30% | 15% |
| ₹12 lakhs – ₹12.5 lakhs | 30% | 30% | 30% | 20% |
| ₹12.5 lakhs – ₹15 lakhs | 30% | 30% | 30% | 20% |
| Above ₹15 lakhs | 30% | 30% | 30% | 30% |
