Income Tax: These deductions and exemptions are allowed only under old tax regime | Mint
Source: Live Mint
In the financial year 2023-24, the new tax regime became the default regime. This regime’s tax rates are lower than those of the old regime, but it phases out most of the exemptions and deductions.
This means if you want to avail any of these exemptions, you must opt specifically for the old tax regime. Here, we list some of the common deductions allowed under the old tax regime. Please note that these exemptions are allowed only under the old tax regime.
Deductions allowed under old tax regime:
1. Section 80C investments: Investment made in ELSS, PPF, SPF, RPF, payments made towards Life Insurance Premiums, the principal sum of a home loan, Sukanya Samriddhi Yojana, National Savings Certificate, and Senior Citizens Savings Scheme.
2. Section 80CCC: Payment made towards premium of a pension fund.
3. Section 80CCD(1): These are the deductions available to individuals against contributions made to the National Pension Scheme (NPS) or the Atal Pension Yojana (APY).
Meanwhile, it is vital to note that the cumulative limit of deductions under the above three sections (section 80C, 80CCC and 80CCD) is ₹1,50,000
4. Section 80D: Payment made towards medical insurance premiums up to a maximum limit of ₹25,000 and ₹50,000 for senior citizens.
5. Section 80DD: Deductions on expenses related to caring for a disabled dependent.
6. Section 80G: Tax deductions for donations made to specified institutions.
However, there are certain exemptions which are still allowed in the new tax regime. These include a standard deduction of ₹50,000 and 80CCD (2) for employer contributions.
It is vital to note that the old tax regime has slightly higher tax rates than the new tax regime.
Meanwhile, resident individuals are also entitled to a rebate of up to 100 per cent of income tax subject to a maximum limit depending on tax regimes as under:
₹12,500 for income up to ₹5 lakh under the old tax regime and ₹25,000 for income up to ₹7 lakh under the new tax regime.
