Income Tax Deduction for Salaried Employees: While filing Income Tax Return (ITR Filing), the government gives tax exemption to every salaried employee in the country in many ways.
Many such provisions have been made, under which a taxpayer in the country can get tax exemption on his earnings. And now after the new income tax regime has become the default, the employee has to manually choose under which tax regime he will pay his tax. Deduction is available in both old and new tax regime, but there is a big difference between the two.
Also, many such deductions are not available in the new tax regime, which are available in the old regime. In such a situation, you should know which deduction you can claim on choosing which regime, so here we are telling what are the options available for claiming tax deduction with the salaried employee.
Rebate under 80C, 80CCC and 80CCD(1)
Section 80C of the Income Tax Act is one of the most popular tools for tax exemption. Under this section, you can get a discount of up to 1.5 lakh. If you have bought life insurance premium, invest in provident fund, pension scheme or have invested money in annuity plan of LIC or any other insurance company, then you can claim deduction under this section. You can get this discount only in the old regime.
Deduction under section 80CCD(2)
This is such a tax deduction, which you can claim in both old and new tax regime. In this section, you can get exemption on investment in Government Pension Scheme i.e. National Pension System. Employees coming under the Central and State Government can claim a deduction of 14% of their salary and 10% of the salary of other employees.
House Rent Allowance (HRA Tax Deduction)
If you live on a rented house and pay rent, you can claim deduction on house rent under section 10(13A) while filing tax under old tax regime. HRA is calculated on the basis of your salary structure, rent, city and HRA received from the company.
Exemption will be available under section 24(b)
The government gives you tax exemption even considering the interest paid on the home loan. If you are paying interest on home loan for the property you are currently living in, you can claim interest deduction while filing ITR in the old tax regime. On the other hand, in the new tax regime, you get a deduction on the home loan of such property, which you have given on rent. Under this section, the interest paid on the home loan is deducted from the rental income, thereby reducing the tax on your rental income.
Standard deduction benefits
The benefit of standard deduction is available in both the regimes. Under this, you can take a discount of 50,000.
87A exemption
This is another tax deduction that you can claim on both the old and the new. In the old regime, you get tax rebate on income up to 5 lakhs, while in the new regime it has been increased to 7 lakhs. In the old regime, you get a rebate of Rs 12,500, while in the new regime it is Rs 25,000.
