New tax regime: what deductions are still allowed

In the new regime you can claim the standard deduction (₹75,000 on the 2025-26 rules), the employer's contribution to your NPS under section 80CCD(2) (up to 14% of salary), the family pension deduction (lower of one-third and ₹25,000), and a few salary items such as transport allowance for a person with a disability. Most Chapter VI-A deductions, including 80C and 80D, are not allowed.

These figures are the signed-off ones for the tax year 2025-26. The figures for the tax year 2026-27, the first under the Income-tax Act, 2025, are provisional: they repeat the 2025-26 values and have not been signed off against the new Act or the Finance Act 2026.

What you can still claim

The table lists what TaxCare's rules count in the new regime. Which other salary allowances and exemptions the new regime keeps depends on the rules in force for the year; check your payslip components against the Income Tax Department's guidance, or ask a Tax Expert.

What is not allowed

In TaxCare's rules, the following are not allowed in the new regime:

• Section 80C, 80CCC and 80CCD(1), including PPF, ELSS, life insurance and tax-saver FDs.
• Section 80CCD(1B), the extra ₹50,000 for NPS.
• Section 80D, health insurance.
• Section 80E, education loan interest.
• Section 80G, donations.
• Sections 80TTA and 80TTB, savings interest.
• Interest on a loan for a self-occupied house.
• Set-off of a house property loss against other income.

Other Chapter VI-A sections that TaxCare models, such as 80DD, 80DDB, 80U, 80EE, 80EEA, 80EEB and 80GG, are also not part of the new regime's deductions.

This is the list TaxCare's calculator applies. Section numbers shown are the earlier Act's numbers, which the Income-tax Act, 2025 renumbers.

Why this matters for your choice

Because few deductions remain, the new regime wins when your deductions are small. It also has lower slabs, and a rebate that removes tax up to ₹12,00,000 of total income on the 2025-26 rules. The rebate does not cover tax on special-rate income such as capital gains.

Take a salaried person with ₹10,00,000 of salary and ₹1,50,000 in 80C. On TaxCare's provisional 2026-27 rules, the old regime gives taxable income of ₹8,00,000 and tax of ₹75,400 including cess. The new regime gives taxable income of ₹9,25,000 and nil tax after the rebate. An old regime claim helps only when your deductions are large. See old vs new tax regime.

An example of the arithmetic

Salary of ₹14,00,000:

• Less standard deduction ₹75,000, taxable income ₹13,25,000.
• No 80C or 80D is subtracted.
• No NPS: taxable income ₹13,25,000, tax ₹81,900 including cess (old regime: ₹2,26,200).
• If your employer contributes ₹1,40,000 (10% of salary) to your NPS, the 80CCD(2) deduction reduces taxable income to ₹11,85,000, and the tax becomes nil after the rebate (old regime: ₹1,82,520). The deduction is within the 14% limit.

Common mistakes

• Assuming 80C still applies because your payroll shows it. Payroll may default to a regime. Check which regime your employer used for TDS, and remember you can choose again when you file.
• Forgetting the employer's NPS contribution, which is a real saving even in the new regime.
• Claiming home loan interest on a self-occupied house.

How TaxCare helps

TaxCare calculates your tax under both regimes from your data and shows which deductions each regime counts. It brings in your salary and TDS, so you do not have to type them. You choose the regime and approve the return. Try the income tax calculator. For help with the choice, see how to switch between old and new regime or ask a Tax Expert.

This guide gives general information and is not professional tax advice.