The new tax regime introduced under Section 115BAC in Budget 2020 has removed almost 70 deductions for individual taxpayers. However, certain deductions are still available to taxpayers under the new tax regime. Here are some of the deductions allowed under the new tax regime:

• Standard deduction of Rs. 50,000 on taxable income.
• Municipality tax, standard deductions under Section 24(a), and interest on home loans for rental income.
• Allowance to cover transportation costs for official purposes, compensations for travel expenses on office tours or transfer, and daily allowances for “ordinary regular charges” or expenses for office duties at a location away from your regular workplace.

It is important to note that many deductions are not allowed under the new tax regime, such as Chapter VIA - Section 80C, 80D (premium on health insurance), 80E, and so on, except Section 80CCD(2) and Section 80JJAA. The standard deduction is also not allowed in the new tax regime until FY 2022-23 (AY 2023-24) .

Taxpayers can choose between the old and new tax regimes based on their income, nature and extent of investments, and financial goals. A salaried taxpayer can choose the new tax regime at the beginning of FY 2023-24 and intimate their employer. The employee cannot change their choice anytime during the financial year. However, they can change their choice when filing the income tax return in July 2024.