There is always confusion among taxpayers about which income tax regime is better for them to save taxes. In some cases, the old tax regime can be better due to deductions; while in other cases, the new tax regime should be opted for. Though the old regime offers a large number of deductions like 80C, 80D and 80CCD, the new tax regime also has few deductions that a taxpayer can claim.
Standard Deduction of Rs 50,000
In the Budget 2023, the government extended the benefit of the Rs 50,000 standard deduction to the new tax regime. This deduction can be claimed without submitting any document to the employer for the same. An employer while calculating taxes on salary automatically takes standard deduction into account.
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If you are a family pensioner, then under the new tax regime you can claim a standard deduction of Rs 15,000. Income for a family pensioner is taxed under the head ‘Income from other sources’.
In the Budget Speech 2023, Finance Minister Nirmala Sitharaman said, “Standard deduction of Rs 50,000 to salaried individual, and deduction from family pension up to Rs 15,000, is currently allowed only under the old regime. It is proposed to allow these two deductions under the new regime also.”
NPS Contribution by Employer
If your employer is contributing to your NPS account, then as a salaried employee, you are eligible to claim a deduction for the contribution made from gross income. This deduction is claimed under Section 80CCD (2) of the Income-tax Act, 1961.
Contributions to Agniveer Corpus Fund
In the Budget Speech, the finance minister announced that any amount paid or deposited to the Agniveer Corpus Fund under the newly proposed section 80CCH of the Income-tax Act can be claimed as a deduction from income by the Agniveer.
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“The payment received from the Agniveer Corpus Fund by the Agniveers enrolled in Agnipath Scheme, 2022 is proposed to be exempt from taxes. Deduction in the computation of total income is proposed to be allowed to the Agniveer on the contribution made by him or the Central Government to his Seva Nidhi account,” she said in the Speech.
According to the Budget memorandum, “It is further proposed to insert a new section 80CCH to the Act to provide that an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after the 1st day of November, 2022, shall be allowed a deduction of the whole of the amount deposited by him and also the amount contributed by the Central Government to his account in the Agniveer Corpus Fund, from his total income.”
