Deductions You Didn't Know You Could Still Claim Under the New Tax Regime in India

Every time I mention the new tax regime to someone, I get the same reaction: "Bhai, wahaan toh koi deduction hi nahi hota" — there's no deduction there at all. And I understand why people think that. The new regime under Section 115BAC is built around the trade-off of lower slab rates in exchange for giving up HRA, Section 80C, 80D, and most of the exemptions people grew up filing with.

But "fewer deductions" isn't the same as "zero deductions." There's a short, specific list of benefits that quietly survive under the new regime for FY 2026-27 (AY 2027-28) — and most salaried people never claim them simply because nobody tells them these exist. If you've moved to the new regime (which is now the default one) assuming you've got no room to reduce your taxable income at all, you're probably leaving money on the table. Let's fix that.

1. The Standard Deduction — ₹75,000

This is the one most people do know, but it's worth stating clearly because some still assume standard deduction is an "old regime only" thing. It isn't. Every salaried individual and pensioner gets a flat ₹75,000 knocked off their gross salary income under the new regime too, no proof or investment required. It's automatic — your employer's payroll system applies it when computing TDS, and it shows up correctly in your Form 16.

How to claim it: Nothing to do. It's built into the salary computation both by your employer and in the ITR utility.

2. Employer's NPS Contribution — Section 80CCD(2)

This is the big one people miss, and it's genuinely one of the most powerful tax-saving levers left under the new regime — especially if you're on a decent salary and have any influence over how your CTC is structured.

Under Section 80CCD(2), if your employer contributes to your NPS account, that contribution is deductible up to 14% of your basic salary (this applies to both government and private-sector employees under the new regime — private sector employees were earlier capped at 10%, but the new regime raised this to 14% to match government employees). The catch: this is the employer's contribution, not yours. Your own NPS contribution under 80CCD(1) doesn't get this benefit in the new regime.

How to claim it: This needs to be structured into your salary as a specific NPS component by your HR/payroll team — it isn't automatic just because your company offers NPS. If your current CTC doesn't have an employer NPS component, talk to HR about restructuring part of your salary into it. On a basic salary of ₹10 lakh a year, 14% works out to ₹1.4 lakh moved out of your taxable income — that's a meaningful shift, and it costs your employer nothing extra since it usually comes out of your existing CTC structure rather than being an additional benefit.

3. Home Loan Interest on a Let-Out (Rented) Property — Section 24(b)

Here's where people get genuinely confused. If your home loan is for a self-occupied property, you lose the interest deduction entirely under the new regime — that ₹2 lakh cap under the old regime simply doesn't apply here.

But if the property is let out or deemed to be let out (rented to someone else), the interest on your home loan remains deductible under Section 24(b), and — this is the part almost nobody knows — there's no upper cap on this deduction, regardless of which regime you're in. If you're paying substantial interest on a rented-out flat, this can meaningfully reduce your taxable rental income.

How to claim it: Declared under "Income from House Property" in your ITR, with your rental income shown and the interest certificate from your lender as supporting documentation.

4. Family Pension Deduction

If you're receiving a family pension (as the recipient after the death of a pensioner — spouse, dependent parent, etc.), a deduction is available equal to one-third of the pension amount, capped at ₹25,000 under the new regime. It's a smaller cap than some other benefits, but it's completely automatic once you correctly classify the income, and it's frequently missed because family pension gets lumped in with regular income without applying this deduction.

How to claim it: Report the pension under "Income from Other Sources" and apply the deduction directly — most ITR utilities calculate this correctly if the income head is selected properly, but it's worth double-checking manually.

5. Agniveer Corpus Fund Contribution — Section 80CCH

A more recent addition, and relevant to a smaller but specific group: contributions made by an Agniveer (or by the Central Government on their behalf) to the Agniveer Corpus Fund are fully deductible under Section 80CCH, with no upper limit, and this survives under the new regime. If you or someone in your family is serving under the Agnipath scheme, this is worth knowing about.

6. Gratuity and Leave Encashment Exemptions

These aren't "deductions" in the Chapter VI-A sense, but they're exemptions that continue to apply regardless of regime, and people sometimes assume — wrongly — that moving to the new regime strips these away too. It doesn't. Gratuity received on retirement (up to the prescribed limit) and leave encashment on retirement remain exempt under both regimes, since these fall under specific exemption sections rather than the deductions that the new regime disallows.

7. Transport Allowance for Differently-Abled Employees

A narrow but important one: differently-abled employees continue to get an exemption on transport allowance (up to ₹3,200 per month) even under the new regime. This is one of the few allowance-based exemptions — as opposed to investment-based deductions — that Section 115BAC specifically preserves.

8. Section 80JJAA — For Business Owners, Not Just Salaried Individuals

If you run a business rather than draw a salary, and you've hired additional employees during the year, Section 80JJAA allows a deduction of up to 30% of the additional employee cost for three years, and this survives under the new regime for business taxpayers. It's a niche one, but if you're a small business owner assuming the new regime gives you zero room to plan, this is worth exploring with your CA.

Why This List Matters More Than It Looks

None of these individually will transform your tax bill the way a full old-regime deduction stack might. But stacked together — standard deduction, employer NPS restructuring, and correctly claiming let-out property interest, if applicable — the difference can run into tens of thousands of rupees a year for a salaried professional. And most of it requires either a one-time conversation with HR (for the NPS piece) or simply knowing to fill the right section in your ITR correctly.

The mistake I see most often isn't people choosing the wrong regime — for a lot of middle-income salaried taxpayers, the new regime genuinely works out better given the rebate and lower slabs. The mistake is people assuming "new regime = no deductions" and then not bothering to check what actually is available, leaving legitimate tax savings unclaimed simply out of that assumption.

Before you file this year, it's worth sitting with your Form 16 and asking specifically: is my employer contributing to my NPS, and is it structured to claim 80CCD(2)? Do I have a rented-out property with a home loan? Am I receiving family pension? These aren't edge cases — they apply to a lot more people than the "zero deductions" reputation of the new regime would suggest.

— Shubh,

Founder,TheSVibes

Also Read :

Top 10 Tax Saving Tips for FY 2025–26 (AY 2026–27)
Old vs New Income Tax Regime in India (FY 2025–26): Which One Should You Choose?

How to File Income Tax Returns (ITR) Online in India – Step-by-Step Guide [FY 2024–25, AY 2025–26]

New Income Tax Act, 2025 vs Old Income Tax 1961 in India