Finance Minister Nirmala Sitharaman announced the addition of a new section called 115BAC to the Income Tax Act in the Union Budget 2020 during her speech. Section 115 BAC is a new and voluntary income tax system for individuals and Hindu Undivided Families that is in effect from FY 2020-21. (HUFs). Let me guide you on the deduction allowed in new tax regime.
Deduction available in new tax regime:
The newly established section 115BAC of the Income Tax Act of 1961 deals with the new income tax structure. You as an individual and Hindu Undivided Families (HUFs) are the only ones who are affected by this section and alternate tax regime, which was introduced in the Union Budget 2020. The income tax slab rates have been cut significantly under this new regime, which is an important element. However, the higher rates come at the expense of a number of important income tax exemptions and deductions that were previously accessible under the old tax system.
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Transportation allowances are excluded (applicable only for specially-abled persons)
Interest received on post office savings accounts during the financial year under Section 10(15)(i) of the Income-tax Act for up to INR 3,500 per individual
You as an employee receive a conveyance stipend to cover transportation costs involved as part of your job.
Allowance received by the employer is excluded. Allowance is a one-time payment made after five years of service in an organisation. Non-government employees are eligible for an allowance exemption of up to INR 20 lakhs. Furthermore, all gratuities collected by government personnel are tax-free.
Section 10(10D) of the Income Tax Act of 1961 provides a tax exemption on life insurance maturity profits.
Interest and maturity amounts received from the Public Provident Fund are exempt from taxation.
Employer's National Pension Scheme contribution
Exemption from paying a lump sum from a National Pension Scheme account when it matures.
Sukanya Samriddhi Yojana gives you a tax break on interest and maturity payments.
Exemption on pension commutation
Exemption from pension commutation
Leave encashment obtained upon retirement
Gift from the company
Monetary advantages acquired under a voluntary retirement scheme
I hope you understood the deduction allowed in new tax regime.
Read More: Is standard deduction applicable in new tax regime? What are deductions and exemptions? What is new tax regime? How to choose between old and new tax regime?Your Feedback Matters! How was this Answer?
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What deductions are allowed in new tax regime?
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2022-05-17T18:00:11+00:00 2022-05-17T18:00:17+00:00Comment
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