New Tax Deductions: Taxpayers to Benefit from These Exemptions in the New Tax Regime

Good news for taxpayers! The new tax regime has introduced several deductions and exemptions, making it more attractive than before. Key benefits include tax-free NPS contributions, exemptions under Agneepath Yojana, and incentives for hiring new employees. Additionally, the tax rebate under Section 87A has been increased to ₹60,000 in Budget 2025.

With 73% of taxpayers already opting for the new tax system, the government expects this number to reach 90% next year. While traditional exemptions may not be available, there are still many tax-saving opportunities. Let’s take a look at the key deductions.

Who Can Claim Tax Exemptions in the New Regime?

✅ Employer’s Contribution to NPS

• Employer contributions to the National Pension System (NPS) are tax-free under Section 80CCD(2).

✅ Income from Agneepath Yojana

• Earnings under Agneepath Yojana are completely tax-free under Section 80CCH.

✅ Incentives for Hiring New Employees

• Businesses hiring new employees will receive an additional 30% tax deduction on their salary costs for three years under Section 80JJAA.

Increased Tax Rebate in Budget 2025

💰 Tax Rebate Under Section 87A

• Before (FY 2023-24): ₹25,000
• Now (FY 2025-26): ₹60,000

This means that more taxpayers will pay little to no tax, making the new tax system even more beneficial.

Allowances Available in Both New and Old Tax Systems

Some key exemptions remain available in both tax systems, ensuring financial relief:

🚗 Travel & Relocation Expenses

• Travel expenses during transfer or official tours remain tax-free.
• Daily travel reimbursements for work-related trips are also exempt.

🚇 Transport & Disability Allowances

• Employees commuting to work without employer-provided transport can claim transport allowance deductions.
• Disabled employees (blind, deaf-mute, or severely disabled) are eligible for special transport allowances.

Can You Still Choose the Old Tax System?

Yes! If taxpayers find the old regime more beneficial, they can switch back. However, it’s advisable to compare both tax structures before making a decision.

With these new exemptions and increased rebates, the new tax regime is becoming more favorable for taxpayers across different income levels. 💰📊

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