With exactly a month left until the September 15 deadline for filing your income tax return for the assessment year 2025-26 (financial year 2024-25), those sticking with the old tax regime still have one advantage over the default new regime, i.e., a wider menu of exemptions and deductions. These can make a real difference to your final tax outgo, but only if you remember to claim them and have the right paperwork in place.
The new regime offers a lower income tax rate (Rs 7 lakh for FY 2024-25) but chucks out the majority of tax benefits such as for house rent allowance (HRA), medical insurance, etc.
What are the key deductions and exemptions available under the Old Tax Regime (OTR) that you should make use of?
The easiest place to start is the standard deduction. Every salaried person and pensioner gets a flat Rs 50,000 knocked off their taxable income automatically. It does not require any investment or proof and is simply adjusted in your calculation.
For salaried employees, HRA can be another useful tax relief wherein the exemption amount depends on your rent, salary and whether you live in a metro or non-metro city. It is important for taxpayers to know that the Income Tax Department has tightened the noose around fake deductions, and hence, the scrutiny is tighter. To claim HRA, you must keep the rent receipts, and if you live with your parents, paying them rent with proper documentation can help you claim it legitimately.
Another popular deduction that old regime filers avail is Section 80C. The limit of exemption if Rs 1.5 lakh under this benefit, and it covers a mix of investments and expenses such as:
Employee Provident Fund (EPF)
Public Provident Fund (PPF)
Life insurance premiums
ELSS mutual funds with a three-year lock-in
Tax-saving fixed deposits (FDs)
National Savings Certificates
Sukanya Samriddhi Yojana deposits
Tuition fees for up to two children
Principal repayment on a home loan
Deductions for health insurance premiums are available under Section 80D up to Rs 25,000 for yourself, spouse and dependent children and an additional Rs 50,000 if you are paying for senior citizen parents. Preventive health check-ups, up to Rs 5,000, are also covered within these limits.
For those with home loans, Section 24(b) allows a deduction of up to Rs 2 lakh on interest for a self-occupied house. If the property is rented out, you can deduct the full interest paid from your rental income.
Savings account interest can be partly shielded too. Under Section 80TTA, non-seniors can claim up to Rs 10,000, while senior citizens can claim up to Rs 50,000 under Section 80TTB, which also includes interest from fixed deposits.
If you have travelled within India, Leave Travel Allowance (LTA) will also apply. This tax benefit is available twice in a four-year block and covers only the cost of travel for you and your family, not hotel accommodation or food. To claim this, you should keep tickets and boarding passes as proof.
Finally, if you contribute to the National Pension System, Section 80CCD(1B) offers an extra Rs 50,000 deduction over and above the 80C limit.
With just weeks to go, it is worth going over your salary slips, investment proofs, and expense records now rather than rushing close to the deadline. A little attention here can help you keep more of your income in your own account rather than sending it off to the tax department.
