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Understand Deductions in the New Tax Regime

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Created on
May 5, 2023


What’s Inside

Union Budget 2023 has brought changes in the country's standard deductions applicable to taxpayers. The budget has revamped everything from revised tax slabs to alterations in the kinds as well as the income amount of deductions and exemptions. Certain other changes are also introduced in the deduction in the new tax regime.

The latest tax regime has become the default structure for tax deductions. The earlier standard deductions are now applicable to pensioners and salaried individuals. However, individuals can still opt for the previous tax regime.

Here is Fi Money sharing all the information you need about the deductions under the new tax regime!

What does deduction mean in the new tax regime?

A standard deduction implies a flat rebate from taxpayers' gross salary. Taxpayers do not need to apply through a form to claim the deduction. They can directly discount it on their income. However, the beneficiaries have to confirm if said deductions are accurately calculated.

The taxes for pensioners also come under standard deductions under the new regime. These taxpayers are divided into the categories of the following:

  • Senior citizens below the age of 80 but above 60
  • Super senior citizens above the age of 80

What are the changes in the standard deductions in the tax regime

As per the Union budget 2023- 2024, the standard deductions applicable to the taxpayers under the old regime will now be available for all under section 115BAC of the Income Tax Act. The benefits have been extended to pensioners, salaried individuals, and family pensioners with deductions under the new tax regime.

The pensioners can claim deductions of ₹50,000 as per section 16 of the IT Act. The family pensioners can receive benefits of standard deductions of ₹15000 or one-third of the total family pension in the latest 2023-2024 regime.

Considering the new deductions, individuals with income up to ₹7.5. lakh do not have to pay any tax. To put it more clearly, the basic exemption limit applies to all with income above ₹3 lakhs except for super senior individuals. Only through the rebates the income up to ₹7.5 lakhs is free from tax liability.

This deduction helps in providing relief to taxpayers from financial burdens. These deductions allow senior citizens to invest in options like NPS to maximise tax savings.

The Final Note 

The standard deduction in the new tax regime attempts to include more individuals in the revised tax structure. The rebate, which was once applicable to individuals in the old tax regime, is now provided to all salaried and family pensioners. It's time you plan your investments properly to take advantage of ₹50,000 deductions in the FY 2023-2024.

Fi Money provides the simplest way to track expenses and plan savings through an AI-powered analyser. It records all your spending, like dining, movie tickets, online shopping, and more. It also occasionally gives you nuggets of wisdom to increase your savings and investments.

Frequently Asked Questions

What exemptions are allowed in the new tax regime?

The new tax regime provides deductions under various categories. These include the following:

  • Standard deductions for salaried individuals and pensioners
  • Deductions for Individuals under section 80CCH in the Agnipath Corpus Fund account
  • Deductions towards contributions to employee's National Pension Fund under section 80CCD(2)
  • Additional employee costs, as mentioned in section 80JJA

Which deduction is not allowed in the new tax regime?

The non-claimable deductions in the new tax regime include the following:

  • Deductions under the provisions section 80C, 80D, 80E, 80CCC, 80DDB, 80DD, 80EEA, 80EE, 80TTA, 80TTB and more
  • Professional taxes
  • LTA and HRA
  • Allowance for child education
  • Helper allowance
  • Entertainment allowance from salaries


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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