As more and more taxpayers in the country are opting for the National Pension Scheme (NPS), investments made by salaried individuals in the NPS will continue to be considered as investments for deductions under the new tax regime as well. 

However, tax relief benefits available under Sections 80C, 80D, 80DD, and 80G have been completely withdrawn.

About 73% of taxpayers filing returns for the financial year 2023-24 have adopted the new system.  The chairperson of the Central Board of Direct Taxes (CBDT) expects that by the end of the financial year 2025-26, the percentage of taxpayers adopting the new system will rise to 90%.

Under the new tax system, taxpayers filing returns can still claim deductions for investments made in the NPS under Section 80CCD. 

Similarly, under Section 80JJAA, if any business hires additional employees continuously for three years after the assessment year, 30% of the expenses incurred for their employment can be deducted from profits. 

As per the provision in Section 87A of the Income Tax Act, taxpayers have been granted a rebate of ₹25,000 from the financial year 2023-24. In the budget for 2025-26, this rebate has been increased from ₹25,000 to ₹60,000.

Taxpayers filing returns under either the new or old tax system will continue to receive travel allowances. Similarly, if an employee is transferred to their job, the transfer allowance provided at that time can also be deducted as an expense. 

Any amount allocated for an employee’s business travel or travel due to a transfer will also be deductible. This includes daily expenses incurred while staying away from the normal place of duty and the expenses borne by the company. 

The amount provided by an employer to an employee as a conveyance for duty purposes will also be deductible from the company’s profits. Additionally, the transport allowance given to employees who are deaf, mute, blind, or disabled will also be deductible as an expense.

The expenses incurred by an employee for commuting between home and the workplace will continue to be deductible. 

Similarly, income received under Section 80 CCH for investments made in the Agnipath Scheme will also be exempt from tax. The Agnipath Scheme, launched on June 14, 2020, allows youth aged 17.5 to 21 years to enrol in military recruitment and gain benefits. 

Under this scheme, 25% of the enrolled candidates will be retained in the regular armed forces as Agniveers. It was decided that youth joining the Agnipath Scheme would receive an annual salary of ₹4.76 lakh. 

In the fourth and final year, their annual income will increase to ₹6.92 lakh. Additionally, they will receive separate allowances for ration, risk, and hardship. If an individual dies or becomes disabled during this period, separate compensation is provided. 

Applicants under the Agnipath Scheme who contribute 30% of their salary to savings will also benefit from the Agniveer Corpus Fund, where the central government will contribute an equal amount. At the end of four years, an applicant will receive ₹10.04 lakh.

Also read:

Income Tax Bill 2025: NRIs earning over ₹15 lakh in India will be taxed as residents