If my CTC is over Rs 50 lakh, and I chose the new tax regime for 2024-25 and contributed 14% of my basic salary to NPS, plus I paid Rs 40 lakh towards my son’s education loan with my wife as a co-borrower, can I switch to the old tax regime when filing my ITR? If yes, how much of my NPS contribution is tax-deductible? And how should we divide the education loan interest for exemption?

Yes you can choose the old tax regime when filing your ITR because salaried individuals can change their tax regime every year. For your NPS contribution, from Section 80CCD(1) of the Income Tax Act, you can avail a deduction of 10% of your salary (DA + Basic) or the actual contribution, whichever is less, up to Rs 1,50,000. Beyond this, you can also claim Rs 50,000 under Section 80CCD(1B). Thus, you can avail a total deduction of up to Rs 2,00,000 for NPS contribution.

In the case of the education loan, Section 80E provides tax relief on interest on an education loan borrowed for the higher education of your son. The relief is based on the payer and not the borrower of the loan. As your wife has no taxable income and you have paid the interest, you are eligible for the entire relief. Ensure you obtain a certificate from the lender indicating the interest and principal amounts. This deduction can be claimed for up to eight years from when the repayment of the loan begins.

If the employer’s contribution to NPS was increased from 10% to 14% under the new tax regime, can someone who initially chose the old tax regime switch to the new one to get the 14% employer contribution? Is there a government rule allowing this change due to the Budget update?

If you had originally selected the old tax regime but wish to change now to avail the advantage of higher NPS contribution (14%), you should know that in the old regime, deductions for employer contributions to NPS are limited to 10%, whereas the new regime will provide up to 14%. You have to communicate your choice of tax regime to your employer. While mid-year changes may be unclear, you can still switch tax regimes when filing your ITR to maximise tax benefits.