To attract more taxpayers to select the new tax regime as their default, the Union budget has added deductions from the old budget to the new one. For correctly filling Form 16 of your ITR, understanding what deductions are allowed in the new tax regime is necessary.
The new tax regime offers a dual system of taxation with multiple deductions and exemptions. Most exemptions and deductions have been discontinued. These changes involve standard deductions for pensioners, salaried individuals, and family pensioners.
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The new tax regime has revised the tax slabs in Budget 2023 for deduction applicability. The post-budget tax rates in the new budget have been recalibrated with respect to the age of taxpayers as well as basic income. The slab changes are as follows:
A health and education cess of 4% is applicable on these tax slabs. Besides, you can also get a rebate worth ₹12,500 in section 87A of the IT Act. The rebate is applicable on income up to ₹7 lakhs for taxpayers in the new regime.
The deductions in the new regime have been changed extensively. Approximately 70 deductions, as well as exemptions from the previous tax regime, have been discontinued now. Some of the important deductions you must keep in mind are:
Popular tax deductions which the Budget 2023 disallows are as follows:
The Budget 2023 has made the new tax regime as the only tax regime in the country. But, the deductions in the new tax regime are provided to make the transition from the old to the new tax structure easy. Keeping a note of these changes is vital to plan your savings better with Fi money.
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The new tax regime offers various deductions for salaried individuals and pensioners. These deductions are applicable as per the revised tax slabs.
Various exemptions and deductions are provided in the new tax regime. They are: