Tax Regime Choice

You can choose the old tax regime when filing your tax return, even if in the beginning you selected the new regime. As a salaried person, you can make this choice each financial year.

File your ITR on Time

If you want to opt for the old tax regime, you need to file your ITR on or before Due Date. Belated ITR’s are not eligible for Old Tax Regime.

Deduction u/s 80C, 80D now available

Section 80C of the Income Tax Act allows taxpayers to claim deductions up to Rs. 1,50,000 for specified investments or expenditures. These investments are as follows:

• Payment for the life insurance premium
• Sum paid under a contract for a deferred annuity
• Contributions to the Employees’ or Recognised Provident Fund
• Contribution to Public Provident Fund Account
• Contribution to an approved superannuation fund
• Subscription to any notified security or notified deposit scheme (Sukanya Samriddhi Account Scheme)
• Subscription to notified savings certificates
• Contribution to the notified unit-linked insurance plan
• Tuition fees for the full-time education of any 2 children
• Certain payments for the purchase/construction of residential house property
• Notified annuity plan of LIC or other insurers
• Term deposits for a fixed period of not less than 5 years with a scheduled bank
• Deposit in Senior Citizen Savings Scheme
• Contribution to Tier-II NPS account by the central government’s employees.

3. Section 80D

Section 80D of the Income Tax Act allows taxpayers to claim deductions for payments made towards Health Insurance premiums and Preventive Health check-ups for self, spouse, dependent children or parents.

The maximum deduction allowed for Self, spouse and dependent children is up to Rs. 25,000. The limit is increased to 50,000 if the specified person is a senior citizen. Along with this, the individual can claim additional deductions up to Rs. 25,000 for their parents below the age of 60 and Rs. 50,000 if the parent is a senior citizen.

Section 80D also allows a deduction of up to Rs. 5,000 for payments made towards preventive health check-ups of self, spouse, dependent children or parents. The payment made for preventive health check-ups may be made in cash.

In case, your parents are senior citizens and they do not have any health insurance, you can still claim Rs. 50,000 towards their medical expenditure incurred.

Exemption for House Rent Allowance

House Rent Allowance (HRA) is an allowance given to an employee by an employer to cover the cost of living in a rented house. Employees can also claim exemptions on these allowances. However, only those salaried taxpayers who are residing in a rented home and actually pay rent for the rented accommodation can claim the exemption. Employees living in an accommodation owned by him or where he does not pay rent towards the accommodation cannot claim exemption for HRA.

‘Salary’ here includes the basic salary, dearness allowance (if it forms part of the salary for retirement benefits), and commission paid to the employee.

The exemption is only available for the period during which the rented house is occupied by the employee and not for any period before or after that. No exemption will be allowed in case your rent is less than 10% of your salary.

Deduction on Account of Home Loan interest

Taxpayers opting for Old Tax Regime will be eligible for Deduction of up to Rs. 200,000 on Account of Home Loan interest.

NPS Tax Deductions in Old Tax Regime

For your NPS contributions, you can claim up to 10% of your salary (Basic + DA) under Section 80CCD(1), subject to a Rs. 150,000 limit. An additional Rs. 50,000 can be claimed under Section 80CCD(1B). This means you can potentially get a total deduction of Rs 200,000 for your NPS contributions.

Education Loan Interest

The interest paid on the education loan of your son qualifies for tax deduction under Section 80E because the loan was taken for the higher education of your son from an approved institution. The person who pays the interest can claim the deduction, regardless of who took the loan. Since you made the payments and your wife is a homemaker and does not have any taxable income, you can claim the full deduction. Make sure to get a certificate from the lender that shows the interest and principal components. It has to be noted that this deduction is available for eight consecutive years from when you start repayment.

Employer's NPS Contribution

The new tax regime allows a 14% employer contribution to NPS, while the old regime allows only 10%. Employers may contribute more, but deduction limits depend on your chosen tax regime. You should check with your employer about mid-year regime changes if you want to take advantage of this benefit. Importantly, you can override your earlier declaration when filing your tax return to optimize your tax benefits.

How to Opt for Old Tax Regime?

Salaried taxpayers filing ITR-1 or ITR-2 can opt in the Old Tax Regime in the ITR form itself. However, the Business Taxpayers are required to file a seperate Form-10 IEA to opt for the Old Tax Regime.