Key Highlights of Income Tax Act 2025 for FY 2025-26

major deductions and exemptions available (or not available) under the New Tax Regime [Section 115BAC] for FY 2026-27 (AY 2027-28). Here’s a practical explanation:

Available Under the New Tax Regime

• Standard Deduction – INR 75,000, Available: Yes, Salaried employees and pensioners can claim a standard deduction of INR 75,000. No bills or proof are required, Deducted automatically from salary income.
• Rebate under Section 87A: Available: Yes. If taxable income is within the prescribed limit under the new regime, a rebate is available. rebate up to INR 60,000. Practical impact: Many taxpayers can achieve nil tax liability up to the eligible income threshold after rebate.
• Interest on Home Loan (Let-Out Property): Available: Yes If a house property is let out (rented): Interest on a housing loan can be considered while computing income from house property. Subject to house property provisions. Available for a let-out property.
• Employer’s Contribution to NPS [Section 80CCD(2)]: Available: Yes This is one of the most valuable deductions under the new regime. A deduction is available for the employer’s contribution to the NPS account. Many salaried employees structure CTC to maximize this benefit.
• Gratuity Exemption: Available: Yes, gratuity received on retirement/resignation remains exempt, subject to prescribed limits under the Income Tax Act.
• Leave Encashment Exemption: Available: Yes. Leave encashment received on retirement is eligible for exemption as per the income tax provisions.

Not Available Under the New Tax Regime

• HRA Exemption: Not Available House rent allowance exemption cannot be claimed under the new regime.
• Professional Tax: Not Available: A deduction for professional tax paid is generally not available.
• Interest on Self-Occupied House Property [Section 24(b)]: Not Available, Old  Regime: Deduction up to ₹2 lakh available. and New Regime: No deduction for self-occupied house property loan interest.
• Chapter VI-A Deductions : Not Available These popular deductions are generally not allowed: Section 80C, Section 80CCC, Section 80CCD(1), Section 80D, Section 80E, Section 80G, Section 80TTA, Most other Chapter VI-A deductions. 
• Section 80CCD(1B) – Additional NPS ₹50,000: Not Available. The additional ₹50,000 deduction available in the old regime cannot be claimed in the new regime.
• Employee Contribution to EPF/NPS: Not Available, employee’s own contribution does not qualify for deduction under sections like 80C or 80CCD(1). Only the employer’s contribution u/s 80CCD(2) remains available.
• Savings Bank Interest Deduction: Not Available: No deduction under Section 80TTA and Section 80TTB in the new regime.

Quick Summary—Professional Takeaway

• When advising clients under the new tax regime, the biggest tax-saving opportunities now are the standard deduction of INR 75,000, employer NPS contribution u/s 80CCD(2), Section 87A rebate, and proper salary structuring through employer contributions. Since traditional deductions like 80C, 80D, housing loan interest (self-occupied), and HRA are unavailable, a regime comparison should be done before filing the return to determine the more beneficial option.
• Allowed: Standard Deduction INR 75,000, Rebate u/s 87A, Employer NPS Contribution u/s 80CCD(2), Interest on Let-Out Property, Gratuity Exemption, Leave Encashment Exemption
• Not Allowed: HRA, 80C, 80D, 80G, 80CCD(1B), Self-Occupied Home Loan Interest, Professional Tax, 80TTA/80TTB, and Employee’s own EPF/NPS deductions
• Before filing your ITR, the taxpayer must reconcile AIS & TIS, review Form 26AS & disclose all foreign income/assets, and choose the correct tax regime. Smart planning >  risky tax-saving tricks. The taxpayer may call us. For assistance with ITR filing, revision, notice replies, or tax planning, you may contact us.