Most traditional deductions are no longer available under the new tax regime, the official notification on new Income Tax Rules 2026 shows that taxpayers, especially salaried employees, can still use a few key benefits to lower their tax burden.
New Income Tax Rules 2026: No big deductions under new regime, but these benefits can still help (AI-generated image)
With the new Income Tax Rules 2026 coming into force, taxpayers are keen to know the changes that have been introduced as part of this mega shift from the decades-old Income-tax Act, 1961. With over 80% taxpayers already under the new tax regime, these taxpayers were eagerly awaiting some tax relief in form of new deductions or exemptions.
But as expected the new tax law has not made any changes to the new regime in terms of any big deductions or exemptions. While most traditional deductions are no longer available, the official notification on new Income Tax Rules 2026 shows that taxpayers, especially salaried employees, can still use a few key benefits to lower their tax burden.
New tax regime: Simpler tax, fewer deductions
The new tax regime was introduced to make taxation simpler by offering lower tax rates but removing most deductions and exemptions. Over the years, the government has gradually made it more attractive.
2020: New regime introduced as optional
2023: Became the default regime; standard deduction extended to it
2024–2026: Further tweaks in slabs and rebates to reduce tax burden for middle-class taxpayers
This steady push shows the government’s intent to move taxpayers towards a clean, deduction-free system with lower rates.
What the new rules say
As per the Income Tax Rules, 2026 notified by the Income Tax Department, the framework of limited exemptions continues. While popular old regime deductions like Section 80C, 80D, HRA are not available, some benefits still remain in the new regime.
1. Standard deduction continues
The Rs 50,000 standard deduction was hiked to Rs 75,000 in Budget 2025. It directly reduces taxable income without any conditions. The old regime still has Rs 50,000 Standard Deduction available and it has not been changed for many years.
2. NPS contribution by employer
The employer’s contribution to the National Pension System (NPS) under Section 80CCD(2) is still allowed. This makes it one of the most effective tax-saving options in the new regime, according to the Income Tax Department.
3. Tax-free retirement benefits
Benefits such as gratuity and leave encashment remain tax-exempt within limits. These provide relief at the time of retirement or job change.
4. Perks and salary structuring matter
The new rules highlight the role of perquisites in tax planning. Employer-provided benefits like accommodation, car usage, or concessional services can be structured in a tax-efficient way.
5. Small exemptions still exist
Even within a simplified system, some exemptions are retained free meals up to Rs 200 per meal are tax-free and gifts up to Rs 15,000 from employer are exempt. These are clearly specified in the notified rules .
6. Home loan benefit (let-out property)
Interest on a rented property can still be claimed under “income from house property,” offering limited relief to homeowners.
What about the old tax regime?
While the new regime has been continuously improved, the old tax regime has largely remained unchanged.
No major increase in deduction limits like 80C (Rs 1.5 lakh cap unchanged for years)
No significant expansion of exemptions
Gradual policy shift favouring the new regime
This shows that the government has taken a neutral-to-indifferent approach towards the old regime, while actively promoting
the new one.
Summing up…
The new tax regime may not offer a long list of deductions, but it still provides targeted benefits through standard deduction, NPS, and employer perks. Combined with lower tax rates, it aims to make tax filing simpler—even if it limits traditional tax-saving avenues.
Disclaimer:
This article is for informational purposes only and is based on official notification containing new income tax rules. Tax rules are subject to change, and individual tax liability may vary based on specific circumstances. Readers are advised to consult a qualified tax expert or financial advisor before making any tax-related decisions.
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