Exemptions and Deductions You Can Still Claim Under the New Tax Regime (FY 2026-27)
"No deductions under the new regime" isn't quite true. A short list survives, and knowing exactly what's on it is worth real money if your employer or your own filing checklist is missing one.
CA Helper Editorial Team
How we research and reviewPublished · 6 min read
Key takeaways
- The new regime isn't deduction-free: the standard deduction (₹75,000), the employer's NPS contribution (up to 14% of salary), and home loan interest on a let-out property all survive.
- The Section 87A rebate makes tax effectively nil up to ₹12 lakh of slab-rate taxable income under the new regime, but doesn't apply to capital gains taxed at special rates.
- Gratuity, leave encashment, and employer EPF contribution exemptions apply under both regimes, they were never Chapter VI-A deductions to begin with, so they aren't "new regime benefits" specifically.
- 80C, 80D, HRA, LTA, the additional NPS deduction under 80CCD(1B), 80E, and self-occupied home loan interest are all unavailable under the new regime, with no exceptions.
- The employer NPS contribution is the one benefit on this list worth actively asking your employer about, since it doesn't happen automatically just because you're on the new regime.
"The new regime has no deductions" is the line most people repeat, and it's close enough to true to be a useful default assumption, but not accurate enough to file a return on. A short, specific list of exemptions and deductions does survive under the new regime, and missing one of them is pure lost money, since there's no itemising required to claim most of these, they either apply automatically or need one small action from you or your employer. This is that list, specifically, without the padding of everything the new regime removes.
What Actually Survives
| Benefit | Amount | What You Need to Do |
|---|---|---|
| Standard deduction (salary and pension) | ₹75,000 a year | Nothing. Applied automatically against salary or pension income. |
| Employer's NPS contribution | Up to 14% of salary (basic + DA), for both government and private-sector employees | Ask payroll to structure part of your CTC as an employer NPS contribution if it isn't already. |
| Home loan interest, let-out property | No upper cap | Automatic if you own a rented-out property and report the loss under house property income. |
| Agniveer Corpus Fund contribution | Both the individual's and the government's contribution | Applies specifically to enrolled Agniveers; not relevant to most taxpayers. |
| Section 87A rebate | Effectively nil tax up to ₹12 lakh of slab-rate taxable income (about ₹12.75 lakh gross salary after standard deduction) | Automatic, but only covers income taxed at slab rates, not capital gains taxed at special rates. |
| Transport allowance for specially-abled employees | A specified monthly allowance | Applies only to employees with a specified disability. |
| Conveyance allowance for official duty | Actual amount for expenses genuinely incurred in performing official duties | Automatic where the employer pays this as a distinct, genuine reimbursement. |
The Two That Actually Move the Needle
For most salaried taxpayers, two items on that table are worth real money, and the rest are either automatic or apply to a narrow group. The standard deduction of ₹75,000 needs no action at all, it's simply subtracted from salary income before tax is computed. The employer's NPS contribution under the new regime is the one genuinely worth actively pursuing: it goes up to 14% of basic salary plus dearness allowance for every employee, government or private, as long as the employer actually structures part of the CTC that way. If your compensation structure was designed before this applied to private-sector employees, it's worth explicitly asking payroll or HR whether a portion of CTC can be routed through employer NPS contribution, since this doesn't happen automatically just because you're on the new regime, it requires the employer to have actually set it up.
Exemptions vs Deductions: A Distinction Worth Keeping Straight
A lot of confusion around "what's allowed in the new regime" comes from mixing up two different things. A deduction reduces your taxable income (like the standard deduction). An exemption means an amount is excluded from income entirely, and several common ones have nothing to do with which regime you're on, because they were never Chapter VI-A deductions in the first place. Gratuity received on retirement, leave encashment, the employer's own EPF contribution up to the prescribed limit, and specified retrenchment compensation are exempt under both the old and new regimes, subject to their own limits and conditions, because they're computed as exempt income at the point of receipt, not claimed as a deduction while filing. If you're checking a "new regime deductions" list and it's missing gratuity or leave encashment, that's not an omission, it's because those items were never regime-dependent to begin with.
What's Explicitly Gone
Knowing what survives is only half the picture; knowing what doesn't survive prevents a filing mistake. Section 80C (PPF, ELSS, life insurance premiums, home loan principal), Section 80D (health insurance premiums), HRA exemption, LTA exemption, the additional NPS deduction under 80CCD(1B), the education loan interest deduction under 80E, and interest on a home loan for a self-occupied house are all unavailable under the new regime. None of these can be claimed alongside the benefits in the table above. If your deduction list is genuinely long once you count all of these, it's worth running the numbers on the old regime instead of assuming the new regime's lower rates automatically win, since that comparison depends entirely on your own numbers, not a general rule.
A Quick Self-Check
- Confirm your standard deduction of ₹75,000 is reflected in your Form 16 or tax computation, it should be automatic but is worth checking.
- Ask your employer whether your CTC includes an NPS contribution under Section 80CCD(2), and if not, whether it can be restructured to include one.
- If you own a rented-out property with a home loan, confirm the interest is being claimed against that rental income in your return.
- Don't try to claim 80C, 80D, HRA, or self-occupied home loan interest if you're on the new regime, they will not be allowed and can trigger a defective return notice.
- If you're unsure whether the old regime would actually work out cheaper given your specific deductions, compute both before filing rather than assuming.
Frequently asked questions
Can I claim HRA under the new tax regime?
No. HRA exemption is one of the deductions removed entirely under the new regime, regardless of how much rent you actually pay or how large your HRA component is. It remains available only if you elect the old regime.
Does the standard deduction apply automatically, or do I need to claim it separately?
It applies automatically for salary and pension income under the new regime, currently ₹75,000. You don't need to submit any proof or make a separate claim; it's built into how tax is computed on salary income.
Is gratuity taxable if I'm on the new tax regime?
Gratuity exemption is not regime-dependent. It's exempt up to its prescribed limit under both the old and new regimes, because it's treated as exempt income at the point of receipt rather than as a Chapter VI-A deduction claimed while filing.
My employer doesn't contribute to NPS on my behalf. Can I still get the 80CCD(2) benefit under the new regime?
Not on your own. Section 80CCD(2) only applies to your employer's contribution to your NPS account as part of your salary structure, so it requires your employer to have actually set this up. It's worth raising with HR or payroll rather than assuming it applies automatically just because you're on the new regime.
If I have a home loan on a rented-out flat, can I claim the interest under the new regime?
Yes, with no upper limit, because it's computed as a loss under house property income rather than claimed as a standalone Chapter VI-A deduction. This is different from a self-occupied house, where interest is not deductible at all under the new regime.
Do I need to opt in to get these new-regime benefits?
No opt-in is needed for the new regime itself, it's the default. Most of the benefits on this list, the standard deduction, the 87A rebate, and exempt items like gratuity, apply automatically once you're on the new regime, though the employer NPS contribution requires your employer to actively structure it into your CTC.
Sources and official references
Rules and rates change. These are the primary sources for the topics covered above, and the place to confirm anything before you act on it.
Disclaimer
This article is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.
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