Under the new tax regime, the government has removed several popular tax-saving provisions--like deductions for investments under Section 80C, health insurance premiums under Section 80D and home loan interest on self-occupied houses. In return, taxpayers benefit from lower tax rates and a simpler tax structure.
Opting for the new regime does not mean there are no opportunities to reduce tax liability. A few important tax benefits remain available and can help salaried individuals lower their taxable income.
One of the most significant benefits under the new regime is the enhanced standard deduction. The deduction has been increased from ₹50,000 to ₹75,000, reducing taxable income by an additional ₹25,000.
Unlike other deductions that require investments or proof of expenditure, the standard deduction is automatically available to eligible salaried taxpayers, making it one of the easiest ways to save tax.
Employer contributions to the National Pension System (NPS) continue to enjoy tax benefits under the new regime.
Employees can claim a deduction on the employer's contribution of up to 14 percent of their basic salary. Earlier, the limit was 10 percent. This higher ceiling provides a valuable opportunity for salaried individuals whose companies contribute to NPS as part of their salary package.
For many taxpayers, this remains one of the most effective tax-saving tools available under the new regime.
While many allowances have lost their tax advantages, reimbursements for genuine work-related expenses can still receive favourable tax treatment.
Expenses such as mobile phone bills, internet charges and other costs incurred for official purposes may not be taxable if they are reimbursed by the employer against actual expenditure.
The key condition is that these payments must be genuine reimbursements supported by expenses incurred, rather than fixed allowances paid regardless of spending.
The new tax regime does not permit deductions for interest paid on home loans for self-occupied properties, a benefit that was widely claimed under the old regime.
However, taxpayers who earn rental income from a property can still account for home loan interest while calculating income from a let-out property.
Although this benefit remains available, any loss arising from such calculations cannot be set off against salary income or other sources of income under the new regime.
For many middle-income taxpayers, the biggest tax relief may come through the rebate available under Section 87A.
Resident individuals with taxable income of up to ₹12 lakh during FY26 can claim this rebate, substantially reducing or eliminating their tax liability. Taxpayers whose income slightly exceeds the threshold may also benefit from marginal relief, ensuring that a small increase in income does not result in a disproportionately large tax burden.
Although the new tax regime has curtailed many traditional deductions, salaried employees still have access to a handful of valuable tax-saving provisions. The higher standard deduction, employer NPS contributions, work-related reimbursements, limited home loan benefits for rented properties and the Section 87A rebate can together help reduce the overall tax burden while preserving the simplicity that the new regime promises.
