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In India, you can now file your ITR by choosing between two tax regimes. The old tax regime offers various tax-saving avenues, including Section 80C deductions, whereas the new tax regime features higher income thresholds for tax exemptions. Let us explore the specific deductions, tax-free allowances, and employer benefits available under the new tax regime that can help you achieve significant tax savings.

Salaried employees and pensioners opting for the new tax regime are entitled to a standard deduction of ₹75,000. A key advantage of this deduction is that it does not require the submission of any bills, receipts, or proof of expenditure.

Under the new tax regime, the exemption available under Section 80CCD(2) of the Income Tax Act is an excellent way to save tax. This provision grants a tax exemption on contributions made by your employer to your National Pension System (NPS) account. Employers can contribute up to 14% of your basic salary and Dearness Allowance (DA) combined.

This benefit is available in addition to the standard deduction of ₹75,000. For instance, if an employee's combined basic salary and DA amount to ₹12 lakh, an NPS contribution of up to ₹1.68 lakh made by the company would be entirely tax-free.

Employer contributions to your EPF account offer tax benefits up to a certain limit. However, it is important to note that if the company's aggregate contribution across EPF, NPS, and superannuation funds exceeds ₹7.5 lakh annually, the excess amount becomes taxable.

If you own a rented-out residential property against which there is an active home loan, you can claim a deduction for the interest paid on that loan even under the new tax regime. Under the new tax regime, several daily reimbursements and benefits provided by your company remain exempt from tax. For the 2026-2027 tax year, an exemption of up to approximately ₹200 per day is available for employer-provided free meals, non-alcoholic beverages, or food coupons usable at restaurants and cafes.

Reimbursements for mobile, internet, and broadband bills incurred for official work are entirely tax-free; you simply need to submit the original bills to your company. Mobile phones and laptops provided by the company for work purposes, along with associated insurance coverage, are also tax-free.

While most allowances have become taxable under the new tax regime, exemptions remain in place for certain allowances linked to official duties. Tax exemptions apply to business travel allowances, transfer-related expenses, daily incidental expenses incurred while on duty, as well as transport and uniform maintenance allowances provided to employees with disabilities.

Disclaimer: This content has been sourced and edited from News18 Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.