New Tax Regime: Understand Exemptions and Deductions
Exemptions
The new tax regime offers limited exemptions compared to the old regime. However, certain exemptions, such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and standard deduction, are still available under the new regime.
Standard Deduction
Under the revised tax regime, a standard deduction of Rs. 50,000 or the amount of salary, whichever is lower, is available for both old and new tax regimes from Assessment Year (AY) 2024-25 onwards.
Deductions
Some deductions available under the new tax regime include:
- Standard deduction for salaried individuals up to Rs. 50,000
- HRA exemption
- LTA exemption
Section 80C Deductions
Various investment-related deductions under Section 80C, such as contributions to Public Provident Fund (PPF), National Pension System (NPS), and life insurance premiums, are available under both the old and new tax regimes.
Conclusion
Taxpayers can choose between the new and old tax regimes based on their income and financial circumstances. The new regime offers lower tax rates but fewer exemptions and deductions. Understanding the available exemptions and deductions is crucial for maximizing tax savings and making informed decisions.
Komentar