Chose the new tax regime? Here are 5 ways to reduce your tax while filing ITR for AY 2026-27

The new tax regime offers lower tax rates but far fewer deductions and exemptions compared to the old tax regime. Hence, many salaried taxpayers believe there is little they can do to reduce their tax liability.

However, even under the new tax regime, there are some tax-saving provisions that can help lower your tax outgo while filing your income tax return (ITR) for AY 2026-27. Here are five of them.

Standard deduction

Salaried employees opting for the new tax regime can claim a standard deduction of ₹75,000 while filing their tax return.

Under the old tax regime, the standard deduction is ₹50,000.

Employer’s contribution to NPS

Under Section 80CCD(2) of the Income-tax Act, an employer’s contribution to the National Pension System (NPS) is exempt up to 14% of the employee's basic pay under the new regime.

This deduction is capped at 10% of the basic pay under the old regime.

Home loan interest on let-out property

Under Section 24(b) of the Income-tax Act, interest paid on a home loan can be claimed as a deduction without any limits against rental income from a let-out property. This benefit applies to both old and new tax regime.

The attractive aspect about this provision is that there is no limit for interest deduction under Section 24(b). You can claim full interest paid as a deduction against your rental income.

For a self-occupied property, a deduction of up to ₹2 lakh on home loan interest is available only under the old tax regime.

Tax exemption on family pension benefits

Family members of deceased employees (other than ex-servicemen) receiving a family pension can claim a deduction of one-third of the pension up to a maximum of ₹25,000 under the new tax regime, according to a Cleartax report.

The maximum deduction limit is ₹15,000 under the old regime.

Tax-free perquisites

A perquisite is a non-cash benefit provided by an employer to an employee as part of the salary package. While most perquisites are taxable, certain benefits are exempt from tax under both the old and new tax regimes.

These exempt perquisites can help reduce an employee's taxable salary. As per a Cleartax report, the following perquisites are exempt from taxation under new and old regimes.

• Telephone or mobile phone provided by the employer for official use.
• Transport facility provided to employees through rail or airways to employees, either free or at a concessional rate.

• Recreational facilities provided by the employer, such as club membership.
• Reimbursement of medical expenses for specified diseases
• Meal card benefits of up to ₹200 per meal are tax-exempt, but for AY 2026-27 this benefit is available only under the old tax regime. From FY 2026-27 onwards, it will be available under both the old and new tax regimes.

Tax slabs in new income regime vs old tax regime

Under the old tax regime, annual income up to ₹2.5 lakh remains exempt from tax. Income between ₹2.5 lakh and ₹5 lakh is taxed at 5%, while income from ₹5 lakh to ₹10 lakh attracts 20% tax. Earnings above ₹10 lakh continue to be taxed at 30%. Under the old tax regime, salaried individuals are eligible for a standard deduction of ₹50,000.

Under the new tax regime, income up to ₹4 lakh remains tax-free. Earnings between ₹4 lakh and ₹8 lakh attract 5% tax, while higher income brackets are taxed progressively from 10% to 30%. Under the new tax regime, salaried individuals are eligible for a standard deduction of ₹75,000.