The new tax regime offers a standard deduction of Rs. 75,000 to salaried individuals. 

Rebate Under New Tax Regime

Resident taxpayers can pay zero tax if their taxable income is below certain income limits. A taxpayer opting for the new tax regime, is eligible for a tax rebate of up to Rs. 60,000. Therefore, under the new tax regime, taxable income of up to Rs. 12 lakh is tax-free with zero tax liability. 

However, for salaried individuals the new tax regime offers tax-free income up to Rs. 12.75. This is due to the standard deduction available. 

Section 115BAC Deductions & Exemptions Allowed

Under the New tax regime, you can claim only the following tax exemptions and deductions:

Chapter VI A Deductions

• Deduction for employer’s contribution to NPS account [Section 80CCD(2)]. A deduction of up to 14% of salary can be claimed.
• Deduction for additional employee cost (Section 80JJA)
• Deduction against amount paid or deposited in the Agniveer Corpus Fund under Section 80CCH(2)

Salary

• Section 80CCD(2) - Employer's Contribution towards pension fund - up to 14% of the salary can be claimed as deduction
• Standard deduction of Rs 75,000.
• Exemption on voluntary retirement 10(10C), gratuity u/s 10(10) and Leave encashment u/s 10(10AA)
• Certain allowances such as transport allowance for specially-abled employees, conveyance allowance for job-related travel, travel compensation for tours or transfers, and daily allowances for duty-related expenses away from the workplace are exempt under specific conditions.
• Perquisites for official purposes.

House Property

• Interest on Home Loan on let-out property (Section 24) can be claimed without any limit. 

Other Sources

• Gifts up to Rs 50,000.
• Deduction of Rs 25,000 against Family Pension.

Section 115BAC Deductions & Exemptions Not Allowed

The New Tax Regime disallows most of the deductions. The following are the deductions that are not available under Section 115BAC. 

Chapter VI A Deductions

• The deduction under Section 80TTA/80TTB 
• Section 80C, 80D, 80E and so on, except Section 80CCD(2) and Section 80JJAA
• Exemption or deduction for any other perquisites or allowances including food allowance of Rs 50/meal subject to 2 meals a day
• Employee's (own) contribution to NPS
• Donation to Political party/trust, etc

Salary

• Professional tax and entertainment allowance on salaries
• Leave Travel Allowance (LTA)
• House Rent Allowance (HRA)
• Allowances to MPs/MLAs 
• Helper allowance
• Children education allowance
• Other special allowances [Section 10(14)]

House Property

• Interest on housing loan on the self-occupied property or vacant property (Section 24)

Other Sources

• Minor child income allowance

Business or Profession

• Additional depreciation under section 32(1)(iia)
• Deductions under section 32AD, 33AB, 33ABA
• Various deductions for donation for or expenditure on scientific research contained in section 35(2AA) or 35(1)(ii) or (iia) or (iii)
• Deduction under section 35AD or section 35CCC
• Exemption under section 10AA for SEZ units 

Old and New Tax Regime for FY 2025-26 - Comparison of Deductions

The below table outlines the deductions & exemption that are allowed and disallowed under the old and new tax regimes:

House Property Deductions and Business Losses Under the New Tax Regime

Can I Switch Out of New Tax Regime?

The new tax regime is the default tax regime for FY 2025-26. However, taxpayers can opt out and still file taxes under the old tax regime if it is beneficial by filing Form 10-IEA.