Union Budget 2023 has made the New Tax Regime attractive by providing taxpayers with an opportunity to claim some deductions. As per the proposed changes in the New Tax Regime, three types of deductions will be available to taxpayers from Assessment Year 2024-24 (FY 2023-24). Here’s a look at the three deductions that you can claim:
Standard Deduction for salaried, pensioners
A Standard Deduction of Rs 50,000 from salary/pension income has been proposed to be provided under the New Tax Regime. Salaried individuals and pensioners will be able to claim Rs 50,000 as a standard deduction from their salary/pension.
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Salaried taxpayers are not required to apply separately for claiming the standard deduction as the employer takes this deduction into account automatically while calculating taxes.
A standard deduction of Rs 15,000 from the family pension is also proposed to be extended to pensioners who opt for New Tax Regime.
Section 80CCH deduction for Agniveers
As per the proposed rules, receipts from the ‘Agniveer Corpus Fund’ by a person enrolled under the ‘Agnipath Scheme 2022’ shall be exempt from tax under Section 10(12C). For this, a new deduction under Section 80CCH has been proposed. This will provide for deductions to individuals enrolled in Agnipath Scheme on or after 01st November 2022. According to the Income Tax Department, the deduction shall be equal to the amount of contributions made to the Agniveer Corpus Fund. This deduction will be available in old as well as new tax regimes.
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According to the Tax Department, the Central Government’s contribution to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme will be considered as salary in accordance with the provisions of Section 17. A corresponding deduction will be allowed under Section 80CCH for the same.
Deduction under Section 80CCD (2)
Employer’s contribution to employee’s National Pension System (NPS) account will also be eligible for deduction under Section 80 CCD (2) in the New Regime. As per rules, a private sector employee can claim a maximum deduction equal to 10% of his/her salary (basic+DA) whereas, in the case of a Government employee, a 14% deduction is allowed.
