• Any individual opting to be taxed under the new tax regime from F.Y. 2020-21 onwards will have to give up certain exemptions and deductions, mentioned below:
1. Leave Travel Allowance (LTA)
2. House Rent Allowance (HRA)
4. Daily expenses in the course of employment
5. Relocation allowance
6. Helper allowance
7. Children education allowance
8. Other special allowances [Section 10(14)]
9. Standard deduction
10. Professional tax
11. Interest on housing loan (Section 24)
12. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
• Points to remember while opting for the new tax regime:
1. Option to be exercised on or before the due date of filing return of income for A.Y. 2021-22
2. In case of a taxpayer having business income, the option once exercised can be withdrawn only once. Further, if the taxpayer withdraws the option, he will never be able to opt-in the option again.
Major tax deductions available if you opt to pay tax as per old tax rates:
Government of India allows various benefits and exemptions to individuals to save Income Tax. Most common options available are listed below.
1. Under section 80C, you are allowed to avail tax exemption of up to Rs.1.50 Lakhs. Various available options under 80C are as under:
• Tax Saving Fixed Deposits
• Public Provident Fund
• Employee Provident Fund
• National Pension Scheme
• Unit Linked Insurance Plans
• Sukanya Samridhi Yojana
• National Saving Certificate
• LIC Life Insurance Premiums
• Children’s Tuition fees (for max. 2 children)
• Senior Citizens Savings Scheme (for above 60 years age)
• Repayment of Home Loans, stamp duty, registration fees and transfer expenses
2. Under section 80D, you can claim maximum deduction of up to Rs.60,000/-
• You can claim deduction of medical insurance premium from Rs.25,000/- to Rs.60,000/-, based on contributions towards self/ family/ parents/ senior citizen parents.
• Under section 80D, for medical expenses of citizens above age of 60 who are not covered under any health insurance policy, you are allowed to claim tax exemption from Rs.30,000 – 60,000/- depending upon whether expenses are for self/ family/ parents.
• Medical checkup expenses of up to Rs.5,000/- is allowed, if the expense is incurred towards a person not covered under any health insurance policy.
3. Under section 80EE, you can claim deduction of up to Rs.50,000/- on home loan interest
4. Under section 80TTA, interest earned in Savings Account is tax free up to income of Rs.10,000/-