Income Tax Return: What can and cannot be claimed under the new tax regime? Check this complete list before filing your ITR..

ITR 2026: The process of filing Income Tax Returns (ITR) is underway. However, before filing the return this time, it is crucial to thoroughly understand the rules of the 'New Tax Regime.' While tax rates are lower under the new tax system, taxpayers must forgo most of the popular exemptions and deductions that were available under the old tax regime. A report by Ayush Mishra in Moneycontrol's personal finance section highlights that taxpayers often mistakenly assume that all deductions applicable under the old system will also apply here.

This leads to errors in tax planning and increases the tax burden. Let us look at insights from tax experts regarding the exemptions you lose under the new tax regime and the limited options still available to you.

What cannot be claimed under the New Tax Regime? Full List

Naveen Wadhwa, Vice President at 'Taxmann,' has detailed the exemptions and deductions that taxpayers do not receive under the new tax regime:

Leave Travel Concession (LTC): Exemption available under Section 10(5).

House Rent Allowance (HRA): House rent exemption available under Section 10(13A).

Official and personal allowances: Allowances covered under Section 10(14) (excluding those that may be specifically prescribed).

Allowances for MPs/MLAs: Under Section 10(17).

Exemption on minor's income: Relief available under Section 10(32).

Deduction for SEZ units: Deduction available under Section 10AA for units established in Special Economic Zones (SEZs).

Entertainment Allowance: Under Section 16(ii).

Professional Tax: Deduction available under Section 16(iii). Home loan interest (self-occupied property): Deduction available under Section 24(b) on interest paid for a home loan for a self-occupied residential property.

Additional Depreciation: Under Section 32(1)(iia) regarding new plant and machinery.

Investment in notified backward areas: Deduction available under Section 32AD for investment in new plant and machinery.

Specific businesses: Deductions available under Section 33AB for tea, coffee, or rubber businesses, and under Section 33ABA for businesses engaged in the prospecting, extraction, or production of petroleum or natural gas in India.

Donations/expenditure for scientific research: Deductions under Section 35(1)(ii), Section 35(1)(iii), and Section 35(2AA) for donations made to approved scientific research associations, universities, colleges, or other institutions. Also, a deduction under Section 35(1)(iia) for payments made to an Indian company for scientific research.

Capital Expenditure: Deduction available under Section 35AD for certain specific businesses, such as cold chain facilities, warehousing facilities, etc.

Agriculture Extension Project: Deduction available on expenditure under Section 35CCC.

Deductions under Chapter VI-A: Popular deductions available under Sections 80C to 80U (such as 80C, 80D, etc.) are completely unavailable. However, exceptions have been made for Section 80JJAA, Section 80CCD(2), Section 80CCH(2), and Section 80LA(1A); meaning, these can be claimed.

What can be claimed under the New Tax Regime?

Even though many major deductions are excluded from this regime... However, according to Chartered Accountant Shreya Gupta Goyal and other experts, certain crucial deductions and exemptions can still be availed under the new tax regime:

Standard Deduction for the salaried class: Salaried employees are entitled to a standard deduction of up to ₹75,000.

Standard Deduction on family pension: A deduction is available on family pension—either ₹25,000 or one-third of the pension amount, whichever is lower.

Home loan interest on rented property: In the case of a rented property, the benefit of a deduction on home loan interest can be claimed under Section 24(b).

Employer's contribution to NPS: A deduction of up to 14% of the salary is available on the employer's contribution to the National Pension System (NPS).

Agniveer Corpus Fund: Deductions are applicable on all contributions made to the Agniveer Corpus Fund under Section 80CCH.

Leave Encashment: Exemption available under Section 10(10AA).

Gratuity: Benefit available under Section 10(10).

Transport Allowances for persons with disabilities: Exemption on transport allowances received by persons with disabilities.

Voluntary Retirement Scheme (VRS): Exemption available for VRS under Section 10(10C).

Gifts: Tax exemption on gifts up to ₹50,000.

Meal Vouchers: Meal vouchers worth up to ₹200 per meal are exempt from tax.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.