What rebate is allowed in the new tax regime?

How to reduce tax in a new 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.

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.

What is the disadvantage of the new tax regime?

Disadvantages. The new tax regime does not allow exemptions. This will lead to an increase in the overall taxable amount of taxpayers. For taxpayers with income up to INR 15 lakhs, the new tax regime has lower income taxes but this is at the sacrifice of exemptions and deductions available under the previous tax regime ...

Is 80D allowed 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.

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.

Is there any benefit of the new tax regime?

Budget 2024 has increased the standard deduction under the new tax regime to Rs. 75,000. The family pension deduction has also been increased from Rs. 15,000 to Rs. 25,000. With the revised tax structure the taxpayer will save Rs.17,500.

Can I claim both 80C and 80D?

These deductions are independent of each other and do not overlap, allowing you to take full advantage of both. For example, you can invest ₹1.5 lakh in eligible 80C instruments like PPF or life insurance and also pay health insurance premiums for yourself and your parents to claim deductions under 80D.

Why is rebate not allowed in the new tax regime?

Under the new regime, the rebate limit is ₹60,000 for resident individuals whose normal income does not exceed ₹12 lakh. This rebate applies only to tax on income taxed at slab rates. Income taxed at special rates, such as short-term and long-term capital gains, cannot be reduced using this rebate.

What are the rebates under new tax regime?

For the financial year 2025-26 (Assessment Year 2026-27), the rebate limit under the new tax regime has been increased to Rs. 12 lakh. Individuals with taxable income up to this amount are eligible for a rebate of up to Rs. 60,000 or the total tax payable, whichever is lower.

How to avoid 40% tax?

How to avoid paying higher-rate tax

1. 1) Pay more into your pension. ...
2. 2) Reduce your pension withdrawals. ...
3. 3) Shelter your savings and investments from tax. ...
4. 4) Transfer income-producing assets to a spouse. ...
5. 5) Donate to charity. ...
6. 6) Salary sacrifice schemes. ...
7. 7) Venture capital investments.

What are the deductions allowed under the new tax regime 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.

Do I need receipts to claim expenses?

If you choose to claim an expense without a receipt, make sure you have other proof of the transaction, either on a bank statement or as detailed notes. You need to be able to demonstrate that the expense is solely for business use and that the amounts have been recorded and calculated accurately.

How is 12 lakh tax free?

The new regime is beneficial as there is zero tax liability for income upto Rs. 12 lakhs for FY 2025-26. Can you pay zero tax on Rs 12 lakhs salary ? Yes , You can pay Zero tax on Rs 12 lakhs salary by claiming deduction and exemption like HRA exemption , 80C deduction , Standard deduction , Housing loan interest etc.

What is the limit of 80D and 80DDB?

The maximum deduction under Section 80D is Rs 25,000 for individuals and Rs 50,000 for senior citizens (aged 60 or above). The maximum deduction under Section 80DDB is Rs 1 lakh per dependent.

Which is better, existing 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.

What is not allowed in the new tax regime?

Fewer Deductions: The new tax regime does not allow deductions such as HRA, LTA, Section 80C, , 80D, medical expenses, education loan interest, or investments in certain plans.

Do we get a refund in the new tax regime?

Rebates under the new tax regime

Additionally, under the new tax regime, you can avail a tax rebate of Rs. 25,000. However, it only applies to individuals whose annual income does not exceed Rs. 7 lakh after deductions.

Can NRI claim deduction US 80C?

Most of the deductions under Section 80 are also available to NRIs. For FY 2023-24, a maximum deduction of up to Rs 1.5 lakh is allowed under Section 80C from gross total income for an individual.

What are exemptions in the new tax regime?

Ans. In the old tax regime, the basic exemption limit for senior citizens is INR 3,00,000/- and for super senior citizens, it is INR 5,00,000/-. In the new tax regime, no income tax is payable upto the total income of INR 7 lakh.

Is 80DD applicable in the new regime?

The deduction amount is up to ₹75,000 for a dependent with a disability and ₹1,25,000 for severe disability. Section 80DD under Old and New Tax Regime: Section 80DD is available only under the old tax regime and not under the new tax regime.