Union Budget 2024: Deductions under New Tax Regime

Deductions in New Tax Regime: Speaking of the new tax regime, the lower tax rates it offers come at the cost of fewer deductions and exemptions, compared to the old regime.

Deductions in New Tax Regime under Union Budget 2024: Taxes are an essential part of our personal finance journey. Until 2020, taxpayers could file their taxes only under one existing regime – the old regime. However, in the Union Budget 2020, the government introduced a new tax regime with the aim of simplifying the tax process with lower tax rates but also fewer deductions.

As of 2024, the new tax regime, with its streamlined process but fewer deductions, is the default tax-filing regime whereas the old regime, offering multiple deductions, is still available, but no longer the default. In this scenario, it is important for taxpayers to determine which regime offers them the most benefits while aligning with their financial goals. To do this, a thorough understanding of the deductions, allowances, and exemptions offered under each regime is essential.

The old regime currently offers a variety of deductions under various sections of the Income Tax Act to help taxpayers lower their taxable income and tax liability. These include the popular Section 80C that comprises insurance premia, investments (Public Provident Fund, ELSS, Employee Provident Fund, children’s education fee, and home loan principal repayments, among others. Deductions and exemptions can also be availed for medical insurance premiums (Sec 80D), interest on education loans (Section 80E), donations to charitable institutions (Section 80G), and interest on home loans (Section 24), to name a few.

Speaking of the new tax regime, the lower tax rates it offers come at the cost of fewer deductions and exemptions, compared to the old regime. Here is a look at the deductions offered under the new tax regime as of 2024.

Adhil Shetty is the CEO of BankBazaar.com

Deductions in New Tax Regime under Union Budget 2024: Taxes are an essential part of our personal finance journey. Until 2020, taxpayers could file their taxes only under one existing regime – the old regime. However, in the Union Budget 2020, the government introduced a new tax regime with the aim of simplifying the tax process with lower tax rates but also fewer deductions.

As of 2024, the new tax regime, with its streamlined process but fewer deductions, is the default tax-filing regime whereas the old regime, offering multiple deductions, is still available, but no longer the default. In this scenario, it is important for taxpayers to determine which regime offers them the most benefits while aligning with their financial goals. To do this, a thorough understanding of the deductions, allowances, and exemptions offered under each regime is essential.

The old regime currently offers a variety of deductions under various sections of the Income Tax Act to help taxpayers lower their taxable income and tax liability. These include the popular Section 80C that comprises insurance premia, investments (Public Provident Fund, ELSS, Employee Provident Fund, children’s education fee, and home loan principal repayments, among others. Deductions and exemptions can also be availed for medical insurance premiums (Sec 80D), interest on education loans (Section 80E), donations to charitable institutions (Section 80G), and interest on home loans (Section 24), to name a few.

Speaking of the new tax regime, the lower tax rates it offers come at the cost of fewer deductions and exemptions, compared to the old regime. Here is a look at the deductions offered under the new tax regime as of 2024.

Adhil Shetty is the CEO of BankBazaar.com