The new regime removes most deductions, but not all. These still lower your tax in Tax Year 2026-27.
What still works in the new regime
- Standard deduction of ₹75,000 for salary and pension. Automatic; nothing to do.
- Employer’s NPS contribution, up to 14% of basic + DA. Ask HR to restructure part of your CTC into employer NPS. On a ₹10 lakh basic, that is ₹1.4 lakh out of your taxable income.
- Employer’s EPF contribution (12% of basic) is not taxed, as long as employer PF, NPS and superannuation together stay within ₹7.5 lakh a year.
- Tax-free reimbursements against bills, where your company offers them, such as official phone and internet use.
- Family pension deduction of up to ₹25,000 for those receiving family pension.
- Interest on a let-out property’s home loan can be set against its rent (but not create a loss against salary).
- Gifts and benefits: gratuity up to ₹20 lakh and leave encashment up to ₹25 lakh on retirement stay tax-free in both regimes.
What does not work any more
80C (PPF, ELSS, LIC, tuition fees), 80D health insurance, HRA, LTA, home loan interest on a self-occupied house and your own NPS (80CCD(1B)) give no benefit in the new regime. PPF and health insurance are still worth having; they just don’t cut tax.
The ₹12 lakh line
If your taxable income is just above ₹12 lakh, marginal relief keeps your tax no higher than the amount above ₹12 lakh. Moving even a small part of your salary into employer NPS can bring you under the line and save the whole tax.
Questions people ask
Is 80C allowed in the new regime?
No. 80C, 80D and HRA are allowed only in the old regime.