With 72% of taxpayers opting for the New Tax Regime, many assume it eliminates deductions. However, three key exemptions can still help reduce your tax burden. Here’s what you should know before filing your taxes.
Standard Deduction
Who Can Claim? Salaried employees & pensioners
Amount: ₹75,000 for FY 2024-25 (earlier ₹50,000)
This automatic deduction lowers taxable income, providing direct tax savings.
Employer’s NPS Contribution (Section 80CCD(2))
Who Can Claim? Employees with employer contributions to NPS
Limit:
- Private sector: Up to 10% of Basic + DA
- Government employees: Up to 14% of Basic + DA
While personal NPS contributions aren’t deductible, employer contributions remain tax-free under the New Tax Regime.
Gratuity & Other Exemptions (Section 10(10))
Who Can Claim? Employees receiving gratuity upon retirement
Exemption Limits:
- Govt. employees: Full gratuity is tax-free
- Private employees: Up to ₹20 lakh tax-free
Additional tax-free benefits include:
VRS payouts (Section 10(10C))
Leave encashment (Section 10(10AA))
Final Thoughts
While the New Tax Regime removes many exemptions, these deductions still help lower your tax liability. Before filing, ensure you maximize these benefits.
Would you prefer the Old Tax Regime (with multiple exemptions) or the New Tax Regime (with lower rates)? Share your thoughts!
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