New Tax Regime: Three Deductions can be claimed

By giving taxpayers the chance to make various deductions, the Union Budget 2023 has made the New Tax Regime more alluring. According to the New Tax Regime’s proposed modifications, taxpayers will have access to three different types of deductions beginning with Assessment Year 2024–2024 (FY 2023-24). The three deductions that you may use are as follows:

Salary and Pensioners’ Standard Deduction
Under the New Tax Regime, a Standard Deduction of Rs 50,000 has been suggested for income from salaries and pensions. Pensioners and salaried people will be able to deduct Rs 50,000 as a normal deduction from their pay.

As the employer already takes this deduction into account when calculating taxes, salaried taxpayers are not required to submit a separate application in order to claim the standard deduction.

For retirees who choose the New Tax Regime, a standard deduction of Rs 15,000 from the family pension is also being recommended.

How much tax you’ll have to pay on income between Rs. 9 and Rs. 15 lakh under the new tax system

Agniveers can deduct under Section 80CCH
According to the proposed regulations, Section 10 of the tax code will not apply to money that someone enrolled in the Agnipath Scheme 2022 receives from the “Agniveer Corpus Fund” (12C). A new deduction under Section 80CCH has been suggested for this. This would make deductions available to people who enlist in the Agnipath Programme on or after November 1, 2022. The deduction must match the amount of payments made to the Agniveer Corpus Fund, according to the Income Tax Department. This deduction will be accessible under both the previous and new tax systems.

According to the Revenue Department, the Central Government’s contribution to an individual who is enrolled in the Agnipath Scheme’s Agniveer Corpus Fund account will be regarded as salary under Section 17’s guidelines. For the same, a commensurate deduction will be permitted under Section 80CCH.

Section 80CCD tax deduction (2)
Under the New Regime’s Section 80 CCD (2), the employer’s payment to an employee’s National Pension System (NPS) account will likewise be deductible. According to the laws, a government employee may deduct up to 14% of his or her pay, compared to a private sector employee’s maximum deduction of 10% of base income plus DA.