New tax regime (section 115BAC): you cannot avail these deductions!

If you choose the new tax regime (section 115BAC) you cannot avail the following deductions.

Published: February 1, 2020 at 2:18 pm

Last Updated on

If you choose the new tax regime (section 115BAC) you cannot avail the following deductions.

Also see List of tax deductions in New tax regime (section 115BAC)

List of deductions excluded from New Tax Regime (Section 115BAC)

(i) Leave travel concession as contained in clause (5) of section 10;
(ii) House rent allowance as contained in clause (13A) of section 10;
(iii) Some of the allowance as contained in clause (14) of section 10;
(iv) Allowances to MPs/MLAs as contained in clause (17) of section 10;
(v) Allowance for income of minor as contained in clause (32) of section 10;
(vi) Exemption for SEZ unit contained in section 10AA;
(vii) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in
section 16;
(viii) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23.
(Loss under the head income from house property for rented house shall not be allowed to be set off under any
other head and would be allowed to be carried forward as per extant law);
(ix) Additional deprecation under clause (iia) of sub-section (1) of section 32;
(x) Deductions under section 32AD, 33AB, 33ABA;
(xi) Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause
(iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35;
(xii) Deduction under section 35AD or section 35CCC;
(xiii) Deduction from family pension under clause (iia) of section 57;
(xiv) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA,
80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under
sub-section (2) of section 80CCD (employer contribution on account of the employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
NPS employer contributions still applicable.

Source: Budget memorandum

New Tax Regime vs Old Tax Regime which should I choose?

You will have to calculate for your case and check like in these examples. Moving to the new regime may provide 5% relief in some case for those earning between 6.5L to 15L or no relief at all. Suppose the total deduction 80C 1.5L + 0.5L (NPS)  + 0.25L (80D)  = 2.25L (HRA and others not included for simplicity)

Example 1

Salary  = 11L  (before deductions).
New Tax Regime: Slab = 20%

Old Tax regime. Salary  = 11L – 2.25L = 8.75L. Slab = 20%. So there is no change in this case!

Example 2

Salary  = 8 L  (before deductions).
New Tax Regime: Slab = 15%

Old Tax regime. Salary  = 8L – 2.25L = 5.75L. Slab = 20%.
So there is a 5% relief if you move to the new tax regime.

The article will be updated with more details as and when available.

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