As per the Current Budget (2020), Citizens are having preferences to adopt the new income tax regime from the next financial year will enjoy the benefit of reduced tax rates but only after forgoing 70 exemptions and deductions. But the new simplified income tax regime, which is optional, still allows you to get the benefit of several other exemptions and deductions.
You can continue to enjoy income tax deduction/exemption on employer contribution to Employees’ Provident Fund (EPF), employer’s contribution to NPS (up to 10% of their basic salary and dearness allowance), maturity amount and bonus from life insurance policies, conveyance allowance, etc. under the new income tax regime, Harsh Jain, co-founder of online investment platform Groww, said.
Check the list of income taxes exemptions and deductions that you can claim under the new tax regime for FY 2020-21 (AY 2021-22):
1) Withdrawal by an employee from the Employees’ Provident Fund (EPF) is not taxable after 5 years of continuous service, Archit Gupta, Founder and CEO, ClearTax, said.
2) The amount received on the maturity of PPF (Public Provident Fund) account and the yearly interest credited to the PPF balance.
3) Withdrawal from National Pension Scheme (NPS) on maturity or premature closure up to 40% of the amount received on such withdrawal remains tax-free for all. In case of partial withdrawal from NPS, up to 25% of the contributions made by the individual will be tax-free.
Employer’s contribution to NPS up to 10% of their basic salary and dearness allowance also remains tax-free.
4) Under Section 10 (10D) of the Income Tax Act, the sum assured and any bonus paid on maturity or surrender of the life insurance plan is tax-free. Maturity proceeds continue to be exempt under Section 10(10D) even in the new regime, Jain said.
5) The maturity amount including interest received on the Sukanya Samriddhi Yojana will not attract any tax.
6) Conveyance Allowance granted to meet expenditure incurred on conveyance in performance of duties of an office and any allowance granted to an employee to meet the cost of travel on tour or on transfer (including relocation) are tax free.
7) Interest received from post office savings account balance up to ₹3,500 annually per individual will remain free from tax.
8) Any scholarship granted to meet education costs is tax exempt under Section 10 (16) of the Income Tax Act.
9) Gratuity received from the employer up to ₹20 lakh after rendering 5 years of continuous service.
10) Leave encashment received at the time of resignation or retirement up to ₹3 lakh.
