Income Tax Saving Options in New Regime 2024 vs Old Tax Regime 2023-24

The Exemptions & Deductions of New & Old Tax Regimes will help you Save on your Income Tax Return Filing by the 31st March 2024 Deadline.

by FighterMan Updated: 20 Feb, 2024, 13:16 IST
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This article will let you know the Income Tax Saving Exemptions & Deductions as per the New Tax Regime of 2024 as presented in the Union Budget 2024. Also, Old Tax Regime (2023-24) saving options are there so can be of help to those who will file their IT return by the 31st March 2024 deadline. The New Tax Regime has removed around 70 deductions for individual and business taxpayers from the Old Tax Regime! These include the popular 80C (up to Rs 1.5 lakh) and 80D (medical insurance premium). Therefore, most advisors are telling their clients to stay with the Old Tax Regime.

Income Tax Saving Options in New Regime 2024 vs Old Tax Regime 2023-24

New Regime Income Tax Slabs 2024

The Union Government introduced a New Tax Regime under Section 115BAC with concessional tax slab rates which are continued as per the Budget 2024 along with some changes. Majorly in the new tax regime, there is Full tax rebate on income of up to Rs. 7 lakhs (compared to Rs. 5 lakhs in the old tax regime) under Section 87A of the Income Tax Act, 1961. Moreover, You will not pay any tax if you are claiming a standard tax deduction of Rs 50,000 on an income limit of Rs 7.5 lakhs.

Income Tax Slabs (same as old tax regime)

Tax Rates (in % p.a.)

Up to Rs. 3 lakhs

NIL

Rs. 3 lakhs- Rs. 6 lakhs

5%

Rs. 6 lakhs- Rs. 9 lakhs

10%

Rs. 9 lakhs- Rs. 12 lakhs

15%

Rs. 12 lakhs- Rs. 15 lakhs

20%

Rs. 15 lakhs & Above

30%

Education Cess

4% p.a. of Taxable Income

The basic tax exemption limit of Rs. 2.5 lakhs under the old tax regime was increased to Rs 3 lakhs under the new tax regime. Additionally, Surcharge Rates are lowered from 37% to 25% for High-Income Individuals (Rs 5 crores & above).

How to Save on Income Tax (Exemptions & Deductions) in the New Tax Regime 2024?

The new tax regime is the default choice for an income tax deduction by an employer and the Income Tax Department. You need to ask your employer or IT department to calculate your TDS and other personal taxes as per the new tax regime. For those remaining to file their 2023-24 ITR, are advised to stick to the old tax regime due to more benefits (check ahead).

Exemptions & Deductions Not Available Under New Tax Regime 2024 (removed from Old Tax Regime): For Individuals

Below are the Exemptions and Deductions you might have used to save tax via the old tax regime, but these are excluded from the new tax regime of 2024 as declared in the Union Budget by our FM Nirmala Sitharaman.

  • Standard Deductions under Section 80TTA

  • Deductions under Section 80C, 80D, 80E, 80CCC, 80CCD, 80DD, 80DDB, 80EE, 80EEA, 80G, etc. of Chapter VI-A of IT Act

  • Professional Tax

  • Entertainment Allowance on Salaries

  • House Rent Allowance (HRA)

  • Leave Travel Allowance (LTA)

  • Helper Allowance

  • Child Education Allowance

  • Minor Child Income Allowance

  • Interest on Housing Loan Self-Occupied/ Vacant Property

  • Other Special Allowance under Section 10(14)

  • Employee’s Contributions to NPS Account

  • Donations to Political Parties/ Trusts

  • Exemptions for Free Food & Beverages through Vouchers or Food Coupons

Income Tax Saving Options in New Regime 2024

Below are the Income Tax Saving Exemption and Deduction provisions in the New Tax Regime. Only 2 from the old tax regime are seen here (80CCD(2) and 80TTB)!

  • Transport Allowances w.r.t. Person with Disabilities (PwD)

  • Conveyance Allowance

  • Travel/Tour/Transfer Compensation

  • Perquisites for Official Purposes

  • Exemptions for Voluntary Retirement Scheme: Section 10(10C)

  • Gratuity Amount: Section 10(10)

  • Leave Encashment: Section 10(10AA)

  • Interest on Home Loan on Lent-out Property: Section 24

  • Gifts of Up to Rs. 5,000

  • Employer’s Contributions to Employees NPS Accounts: Section 80CCD(2)

  • Additional Employee Costs: Section 80JJA

  • Standard Deductions on Family Pension: Section 57(IIA)

  • Deductions on Deposits in Agniveer Corpus Fund: Section 80CCH(2)

  • 80TTB Standard Deductions: Salaried individuals are eligible to claim the benefit of standard deductions of Rs. 50,000 under the new tax regime. You can avail of this benefit as Section 80TTB deduction. Besides, Family pensioners can claim the standard deductions of Rs 15,000 under the new tax regime.

Exemptions & Deductions Not Available Under New Tax Regime: For Businesses
  • Additional Depreciation: Section 32

  • Investment Allowance: Section 32AD

  • Sector-wise Deductions for Businesses: Section 33AB and 22ABA

  • Expenditure on Research & Development: Section 35

  • Expenses on Capital Expansion: Section 35AD

  • Exemptions for Units in SEZ: Section 10AA

  • Depreciation and Losses in the Business

Income Tax Saving Options for Old Regime 2023-24

Here are the ways to save on old regime Income Tax for Individual taxpayers by the 31st March 2024!

80C

A maximum deduction of Rs 1.5 lakh per financial year can be claimed by individuals under section 80C for investments in Public Provident Fund (PPF), Employees Provident Fund (EPF), equity-linked savings scheme (ELSS), tax-saving fixed deposits (FD), National Savings Certificate (NSC), and some more. Actually incurred expenses like life insurance premium, children's school fees, and repayment of home loan principal are also included.

80CCD(1B): National Pension Scheme

The deduction under section 80CCD(1B) of up to Rs 50,000 (NPS: National Pension Scheme) is over and above the threshold limit of Rs 1.5 lakh under section 80C. Hence combining both the deductions you can claim up to Rs 2 lakh as a tax deduction.

80CCD(2): Employer Contribution to NPS

The Deduction under section 80CCD(2) can only be claimed if an individual's employer (government or private) contributes to the individual's NPS account. The maximum deduction that a private sector employee can claim is 10% of his/her salary where salary means basic plus dearness allowance (DA). Besides, Government employees can claim up to 14% of salary as a deduction.

Employer's contribution to NPS, EPF and a superannuation fund is also eligible for deduction but only up to Rs 7.5 lakh in a financial year. However, if the total contribution by the employer exceeds Rs 7.5 Lakh in a financial year, then the excess contribution would be taxable in the employee's hands as perquisites and any interest or dividend earned on it will also be taxable in employee's hand.

80D: Health Insurance

Deduction under section 80D is available only if you have purchased a health insurance policy for self, spouse, dependent childrens or parents. Those below the age of 60, can claim up to Rs 25,000 for health insurance premium paid for self, spouse and dependent children. Further, if you are paying health insurance premium for your parents aged below 60 years, then an additional amount i.e. Rs 25,000 can be claimed.

16(iii): Professional Tax

Section 16(iii) allows salaried individuals to deduct the professional tax paid while computing the taxable salary.

Leave Travel Allowance

Leave Travel Allowance (LTA) is a reimbursement that the employee can claim in connection with himself and his family (spouse, children, parents, brothers and sisters) who are wholly dependent on the employee and traveling on leave to any place in India. The Income-tax act has defined what are the parameters to follow (included: airfare, train ticket, bus fare | excluded: sightseeing, hotel, food) to get the amount which can be claimed as deduction for LTA.

80GG: House Rent Allowance (HRA)

HRA under 80GG allows upto Rs. 5000/month or 25% of total Yearly income or Actual Rent in excess of 10% of total yearly Income. If you are paying rent for living in a house and also get an HRA component as part of your salary structure, then you can claim tax exemption on HRA. Having said that, if an individual does not get HRA as part of his/her salary but pays rent then also he/she can claim tax exemption on HRA after a specified calculation with maximum limit of Rs 60,000 as annual rent.

10(10AA): Leave Encashment

According to 10(10AA), leave encashment refers to encashment of unutilised earned leave at the time of retirement. Government employees have no monetary limit for claiming deduction of leave encashment. However, Non-government sector employees have a specified calculation to follow in order to know the exact amount of leave encashment that can be claimed as a tax deduction.

24(b): Home Loan Interest

Under section 24(b) if an individual is residing in the house for which he/she has taken a home loan then a deduction for interest paid on such a home loan can be claimed as a deduction. The maximum amount that can be claimed as deduction for home loan interest is Rs 2 lakh in a given financial year. It is also available for the principal component deduction of up to Rs 1.5 lakh under section 80C.

80E: Educational Loan

Under section 80E an individual can claim deduction for interest component under an educational loan. There is no limit on the maximum amount of deduction that can be claimed under section 80E, and neither is an individual required to upload any documentary evidence for claiming such a deduction. This deduction is allowed for a maximum of 8 years. The loan should have been taken from any financial institution or any approved charitable institution to pursue his higher education or for higher education of his relative.

80EEB: Electric Vehicle Loan

An individual can claim up to Rs 1.5 lakh per financial year as deduction for interest on an electric vehicle loan. However, the loan must be sanctioned between April 1, 2019 and March 31, 2023.

80TTB Standard Deduction

Income from Deposits up to Rs.50k (For Senior Citizens) and Rs. 10k (Below 60 Years).

80G: Donations

The deduction under section 80G can be claimed on the amount donated to eligible institutions or funds. The deduction can be claimed up to a maximum of 50% or 100% of the donated amount, depending on the institution or fund to which the donation has been made.

80QQB: Royalty

Section 80QQB of income tax act 1961, states provisions related to Royalty or copyright Income. This section includes deductions for royalty income of authors. The income from the royalty is taxed under profit and gains of business or profession or other source.

As told earlier, it is best to stick to the old tax regime for now especially for taxpayers remaining to file their 2023-24 ITR due to the existing benefits it provides which are not available in the new tax regime. 

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Top Comments
Deal Cadet Deal Cadet
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Old tax regime is still best and I have been able to save more tax with old regime.
Commentator Commentator
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Old regime is gold fist New regime is good only for peple with < 10L annual income.Anyway useless Nirmala is going to remove old regime completely in 2 years.
Deal Cadet Deal Cadet
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@Demon_slayer Wrong. If you dnt come under taxable income. Shud nt deduct
Deal Subedar Deal Subedar
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@humanity Companies that don't give (some) of their employees pf benefits, treat them as consultants. As such deduct tds from their income.
60 Comments  |  
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Deal Cadet Deal Cadet
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Old tax regime is still best and I have been able to save more tax with old regime.
Deal Cadet Deal Cadet
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Depends on income

View 8 more replies
Commentator Commentator
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Old regime is gold fist New regime is good only for peple with < 10L annual income.Anyway useless Nirmala is going to remove old regime completely in 2 years.
Deal Cadet Deal Cadet
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New regime is good for freelancers because they cant use any sort of deductions if they are filing under 44ADA
Deal Cadet Deal Cadet
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How to save tax for 16LPA and for 21LPA using the old regime?
Deal Newbie Deal Newbie
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1) 80C -150K
2) NPS - 50K 
3) Health Insurance (Self and parents) - Based on parents age 
4) Home loan (Interest  - Section 24b - 200k  + Principle - Section 80 C )
5) Standard Deductions  - 50k
6) HRA - Based on your pay

- Leave Travel/ Electric vehicle loans/Education loans if any. 

I see noting more than this
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Deal Cadet Deal Cadet
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inspite of record inflation and higher interests, insurance premiums, sky rocketing rents, food and fuel costs it is sad to see the limit of taxing remains the same (in old regime) no increase in slabs, no increase in 80c, no increase in hra or home loan or insurance limits.

this means people will have to cut down on savings and retirement and insurance to pay taxes

Spearhead Spearhead
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Guys I recently joined a company and my package is less < 3lpa but they are saying I have to pay 5% of IT 🥲 can any one tell me if it's old or new...
Deal Cadet Deal Cadet
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You tax liability is 0 in both regimes.  

View 5 more replies
Deal Newbie Deal Newbie
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My salary is 10LPA and 3 LPA from Share market short term capital gain. How much I need to pay tax? Any expert view pls
Deal Cadet Deal Cadet
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do tagged me if anyone knows the answer
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Deal Cadet Deal Cadet
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Valuable information plus1
Helpful Helpful
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Anyone earning more than 30 lpa, go for new regime

Deal Newbie Deal Newbie
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How?  Whats the maths behind this?

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Deal Newbie Deal Newbie
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Remember that what is good for the economy is not always good for its citizens
Helpful Helpful
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whatever is good for country's economy is exactly and always what is good for its citizens economy . even in the long term.

Believe me even if the taxes are 0 , and if its not good for the country's econmy , its also not good for any of its citizens economy. however the citizens may feel otherwise

what is good for the economy is not always perceived as good by citizens but is exactly always good for them

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Deal Cadet Deal Cadet
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For many people having a deduction above 2.12 lakh is difficult ( 1.5+NPS 50+ Health Insurance Premium). So that make New regime better above 8 lakhs . If you have Housing loan etc , then the threshold increases . But for incomes above may be 18-20 lakhs New regime must be better irrespective of the deductions. 1ab7f45a-9237-4d47-8777-460f32f406c1
Crowdpuller Crowdpuller
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Can someone tell, if the tax is already deducted for a particular month salary and the exemption proof is given..how to claim that tax??
Deal Subedar Deal Subedar
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Just file itr when it's time, you will get refund from the IT dept.
The PostMighty The PostMighty
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I don't why people see benefit in new and old regime, in any case we need to pay tax without anything in return, not now not in future, nothing for our children and nothing for our parents... This tax is clearly a burden
Helpful Helpful
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Exactly. Jab kamaai ho rahi hoti hai, immediately IT dept runs to chuck off approx 30%. But if you get laid off or occur loss in business, no one from IT Dept will come and ask, hey, can we help by paying your kid's school fees, can we help with the health insurance? Zero unemployment benefits or social security. It's a one way street to fulfill the maharaja lifestyle of supreme leader and gang. As long as you are feeding these fat cats, you are o use to them, else no one cares if you and family are even alive or dead.
Deal Newbie Deal Newbie
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Your stock market income is taxed (Long term/Short team) irrespective of your income. 

Helpful Helpful
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nope, I dont think so.
If some one has stock market income of less than 7.5 lakh and total income also less than 7.5 lakhs, they dont need to pay any tax
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Deal Cadet Deal Cadet
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This is my version, hope it will be useful:
1. 50,000 - allowed as standard deducƟon for every salaried individual

2. 1,50,000 - is allowed under sec 80C, it includes the following:
a) EducaƟon or tuiƟon fee
b) ContribuƟon to EPF, PPF, NSC, ELSS
c) Principal repayment made towards home loan (Only for self-occupied properƟes, not for the
let-out properƟes)
d) Life insurance premium
e) TAX saving FDs
f) Investment in ULIP policies

3. 50,000 – Invest in NPS under sec 80CCD(1B)

4. 2,00,000 – Amount paid towards home loan interest repayment under Sec 24 (Only for self-
occupied properƟes, not for the let-out properƟes)

5. 25,000 – Premium paid towards medical insurance for self, spouse and children under sec 80D

6. 50,000 - Premium paid towards medical insurance for Parents under sec 80D

7. 25,000 – Any amount donated to recognised organisaƟons under sec 80G

8. 24,000 - sec 80GG allows tax deducƟon on rent paid, max 2000 per month
Deal Newbie Deal Newbie
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donation to political party upto 20% of your income
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Wingman Wingman
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I have taken a home loan in 2022. Can I use section 24(b) for deduction on home loan interest?
Wingman Wingman
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please answer anyone 

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replyuser
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