The new tax regime may have been introduced as a simpler, less-cumbersome-paperwork alternative to tax-payers, but it is not completely devoid of tax relief.

In the financial year 2023-24 onwards, the new regime is set to be the default tax system. That is, the rates and rules under this system will be applicable unless you expressly choose the older regime, which offers various exemptions.

The official tax calculator launched recently by the income tax department is a handy guide for individuals to choose the regime with lower tax liability.

However, before making the final decision, you also need to be aware of the exemptions that you will be entitled to even under the new tax regime. Here are six such tax exemptions under the new regime (as also the older regime).

1) STANDARD DEDUCTION OF RS 50,000

Introduced in Budget 2023 to make the new regime more appealing to taxpayers, this is the most well-known tax benefit offered under the system. It is offered by default; that is, you do not have to take any measures or show proof to claim this deduction.

However, not all taxpayers are eligible for this benefit. As in the case of the older regime, it is restricted to salaried employees and pensioners. Businesspersons or self-employed professionals cannot avail of this tax break. Family pensioners (who receive pensions after the death of the retiree entitled to pensions) can also claim this deduction.

2) EMPLOYERS’ CONTRIBUTION TO EMPLOYEES’ NPS

This is among the lesser-known tax benefits, and available under both regimes. While other National Pension System-linked tax deductions — Rs 1.5 lakh under section 80C of up and Rs 50,000 under 80CCD (1B) — do not find a place in the new regime’s scheme of things, this deduction is retained.

An employer’s contribution to the National Pension System (NPS) up to 10 percent (14 percent of government employees) of an employee’s basic pay plus dearness allowance is allowed as a deduction under section 80CCD(2). “Amount contributed by the employer is first added to the income under the head salary and then allowed as deduction under section 80CCD(2) to the extent of 10% of salary,” says Kuldip Kumar, personal tax expert and former National Leader, Global Mobility Services, PwC India.

However, the tax-free limit on benefits received from employers is capped at Rs 7.5 lakh a year. If the total benefits breach this cap, the excess amount will be treated as employees’ taxable perquisites.

“Those who land new jobs now should make it a point to negotiate hard to include this benefit in their cost-to-company (CTC) package. Existing employees, too, can renegotiate with their employers and HR to restructure their salaries so as to avail of this benefit from the new financial year,” says Sudhir Kaushik, Co-founder and CEO, TaxSpanner.com, a tax consulting firm.

3) EMPLOYERS’ EPF CONTRIBUTION OF UP TO 12 PERCENT OF THE BASIC SALARY

Your employer contributes 12 percent of your basic salary to your employees’ provident fund (EPF) account. This amount, too, is exempt from tax as long as the aggregate retirement benefits that you receive from your employer do not cross the Rs 7.5-lakh limit in a year.

4) TAX EXEMPTION ON LIFE INSURANCE MATURITY PROCEEDS

Besides gullible policyholders who fall for dubious sales pitches, investment-cum-insurance life policies are often preferred by high-networth individuals, who see tax-free maturity proceeds as a huge plus. Again, this benefit is available under both regimes.

However, it comes with certain caveats, if you have bought policies that come bundled with an investment, such as a unit-linked insurance policy (Ulip) or an endowment plan.

From the financial year 2021-22, the government has introduced restrictions on maturity proceeds of Ulips. So, if you pay aggregate premiums of over Rs 2.5 lakh on policies purchased after February 1, 2021, the maturity proceeds will attract tax. Budget 2023 has extended similar restrictions to traditional non-Ulip policies, largely endowment plans. If the aggregate premiums of such policies bought post April 1, 2023 exceed Rs 5 lakh, the income earned at the end of the tenure will be subject to tax.

In all cases, proceeds received by nominated family members on the policyholder’s death are not taxable.

5) STANDARD DEDUCTION ON RENTAL INCOME

If you own a property that you have rented out, you can claim a standard deduction of 30 percent against your let-out property’s annual value.

Put simply, annual value is the gross annual value (actual rent or reasonable rent as per market rates) minus municipal taxes paid.

6) PPF OR SUKANYA SAMRIDDHI YOJNA MATURITY PROCEEDS

You will not have to pay tax on maturity proceeds from investments made in the public provident fund (PPF) and Sukanya Samriddhi Yojana. However, under the new regime, investments made in these accounts will not be eligible for section 80C deductions up to Rs 1.5 lakh that the old regime provides.