Is 80CCD allowed in the new tax regime?

Gefragt von: Konstantinos Köster-Menzel
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In the new tax regime in India, only the deduction for the employer's contribution to the National Pension System (NPS) under Section 80CCD(2) is allowed.

Does 80CCD applicable in the new tax regime?

Availability of 80CCD deductions under the new tax regime

The new tax regime introduced in 2020-21 offers lower tax rates, fewer deductions and exemptions. The new regime does not allow the Section 80CCD deduction.

Can we claim NPS contribution in a new tax regime?

This change (effective FY 2025–26) means under the new regime you can deduct employer contributions up to 14% of your Basic + DA. In summary: under the new tax rules, NPS deductions are limited to Section 80CCD(2), but that deduction is quite generous at 14% of salary (employer's share).

What deductions can I claim in the new tax regime?

The new tax regime allows salaried people and senior citizens earning pensions a standard deduction of ₹75,000. Family Pension: If you have a family pension income, the new regime offers a deduction for it. You can claim a deduction of ₹25,000 or one-third of the pension amount, whichever is lower.

What exemptions are allowed in the new tax regime?

The basic tax exemption limit of ₹2.5 lakhs under the old tax regime increased to ₹3 lakhs under the new tax regime in Budget 2024 and further increased to ₹4 lakhs in Union Budget 2025. The latest exemption limit is applicable from 01 April 2023 and it continues in 2024 as well when opting for the new tax regime.

Section 80CCD(2) - Employer's Contribution to NPS | NPS in New Tax Regime | NPS Deduction Income Tax

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What is the maximum limit of 80CCD 2?

₹2 lakhs is the 80CCD (2) maximum limit that can be claimed under the section. It contains the additional deduction of ₹50,000 that is available under 80CCD (1B).

What are the drawbacks of the new regime?

A key feature of the new regime is the limited scope for deductions. Taxpayers cannot claim most common deductions available under the old regime, including Section 80C (investments in LIC, PPF, ELSS, etc.), Section 80D (health insurance premiums), Section 80E (education loan interest), and House Rent Allowance (HRA).

What rebate is allowed in the new tax regime?

Under the new regime, a rebate of Rs.25,000 is allowed for an income up to Rs. 7 lakhs. Under the old regime, a rebate of Rs. 12,500 is allowed for an income up to Rs. 5 lakhs. For FY 2025-26, rebate of Rs. 60,000 is allowed under the new regime for an income up to Rs. 12 lakhs.

Can I claim 80D in the new tax regime?

The new tax regime has eliminated nearly 70 tax deductions that were previously allowed in the old regime. Under the new regime, deductions for health insurance premiums (Section 80D) and investments up to ₹1.5 lakh (Section 80C) are not available.

Can I claim NPS in both 80C and 80CCD?

Is 80CCD included in 80C? No. Section 80C pertains to deductions that can be claimed for certain investments while Section 80CCD pertains specifically to NPS and APY deductions. However, the total amount of deductions that can be claimed is ₹ 1,50,000 for both sections combined.

What are the benefits of using 80CCD?

Section 80CCD of the Income Tax Act provides deductions for contributions made to the National Pension System (NPS) — a voluntary retirement savings scheme regulated by PFRDA. It encourages systematic savings for retirement during an individual's working life. Each comes with its limits and benefits.

How to save tax in a new tax regime?

How to Save Tax in India? 10 Smart and Legal Ways for FY 2025-26

  1. Use Section 80C to Save up to ₹1.5 Lakh. ...
  2. Invest in National Pension System (NPS) – Section 80CCD(1B) ...
  3. Claim House Rent Allowance (HRA) ...
  4. Interest on Home Loan – Section 24(b) ...
  5. Tax Benefits on Education Loan – Section 80E.

What is the difference between 80CCD 1 and 80CCD 2b?

80CCD(1) is deduction based on the contributions made by employee/self to NPS and 80CCD(2) is for the contributions made by employer towards NPS.

Can I claim anything under the new tax regime?

Yes, Standard deduction of Rs.50,000 or the amount of salary, whichever is lower, is available for both old and new tax regimes from AY 2024-25 onwards.

What happens if I choose a new tax regime?

The old regime allows various deductions and exemptions, while the new regime offers lower tax rates but no deductions. Key differences include tax rates and availability of deductions. Can I switch between the old and new tax regimes every year? Salaried individuals can switch annually by informing their employer.

What is not allowed under the new tax regime?

Amount deductible from gross salary (except standard deduction), which is not allowed under the new regime i Following are not allowed to be deducted in new regime: Exemption with respect to travel concession or assistance as covered in section 10(5); HRA exemption as covered in section 10(13A);

Which is better, the tax regime old or new?

The new tax regime offers a simplified tax structure with limited deductions compared to the old regime. While you can't claim popular deductions like those under Section 80C, you can still avail a standard deduction of ₹75,000 for the financial year 2024-25.

Can I claim 80C in the new tax regime?

Those following the new tax regime, however, will not be able to claim these deductions—making Section 80C relevant mainly for old regime taxpayers.

Is 80CCD 1B allowed under the new tax regime?

No, the new tax regime does not allow deductions under 80CCD(1B) or 80CCD(2). These are only available under the old tax regime.

How much NPS is tax free in the new tax regime?

The budget has created an effective tax-free income limit of ₹13.7 lakh for salaried individuals investing in NPS. This includes the ₹12 lakh rebate, ₹75,000 standard deduction and 14% NPS contribution deduction. So, anyone earning up to ₹13.7 lakh will have zero tax liability.

What is the difference between 80D and 80CCD?

Section 80CCD offers tax deductions for contributions to pension schemes provided by the Central Government (e.g., the National Pension System). Section 80D offers deductions on premiums for health insurance policies for self, spouse, dependent children, and parents.

What are the deductions allowed in the new tax regime for FY 2025-26?

For FY 2025–26, the new tax regime effectively makes income up to ₹12 lakh tax-free due to the enhanced rebate of ₹60,000. In addition, a standard deduction of ₹75,000 is available for salaried individuals, making a salary income of up to ₹12.75 lakh effectively tax-free.

What is taxable in the new tax regime?

The new income tax slabs and rates under the new regime for the FY 2025-26 (AY 2026-27) are as follows: Rs. 0 to Rs. 4 lakh – Nil, Rs. 4 lakh to Rs. 8 lakh – 5%, Rs. 8 lakh to Rs. 12 lakh – 10%, Rs. 12 lakh to Rs. 16 lakh – 15%, Rs. 16 lakh to Rs. 20 lakh – 20%, Rs. 20 lakh to Rs. 24 lakh – 25%, and income above Rs. 24 ...