The new Budget for the financial year 2020-21 introduced a new income tax regime for individual taxpayers. However, the new tax regime requires the individual taxpayer to renounce certain specified deductions.

In the old tax regime, the taxpayers benefitted from several tax exemptions and deductions including tax deductions on health insurance and Equity linked savings schemes investments under section 80 C like LIC and house rent allowance, which is not possible on switching to the new system because the new tax policy does not offer exemptions like the old one. In simple words, a salaried taxpayer will have to forgo the available deductions and exemptions in the old tax regime if he wishes to switch to the new tax regime.

Under the new income tax regime, taxpayer cannot claim the standard deduction of Rs. 50000, no deductions based on section 80C, interest on self-occupied property of Rs. 2 lakhs and other deductions which are availed by many tax payers. In fact, the new tax regime allows the tax payers to claim only one deduction – which is section 80 CCD(2). Section 80CCD (2) allows salaried individuals to claim deductions up to 10% of their salary which includes the basic pay and dearness allowance or is equal to the contributions made by the employer towards the NPS.

If you are really looking for a way to save on taxes, below we have given some recommended ways by investing in various schemes or claiming the appropriate exemptions in the old tax regime.

Also, first time home buyers can claim an additional deduction from taxable income of 50,000 on home loan interest under section 80EE, provided the following criteria are met:

  • The housing loan should be sanctioned in the FY 2016-17
  • The loan should not be more than `35 lakhs
  • The residential house value should be less than `50 lakhs
  • The home buyer should not have any other residential property registered in his name
HR software-to-edit-attendance
HR software-to-edit-attendance
HR software-to-edit-attendance
HR software-to-edit-attendance
HR software-to-edit-attendance
HR software-to-edit-attendance
HR software-to-edit-attendance

All these above methods are some of the ways to save tax on income in India for 2019-20 and 2020-2021. Note that there can be subtle differences in these points based on annual revisions.