The following are the deductions and exemptions you cannot claim under the new tax system:

1. The standard deduction, professional tax and entertainment allowance on salaries
2. Leave Travel Allowance (LTA)
3. House Rent Allowance (HRA)
4. Minor child income allowance
5. Helper allowance
6. Children education allowance
7. Other special allowances [Section 10(14)]
8. Interest on housing loan on the self-occupied property or vacant property (Section 24)
9. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJAA)
10. Without exemption or deduction for any other perquisites or allowances
11. Deduction from family pension income

You can claim tax exemption for:

1. Transport allowances in case of a specially-abled person.
2. Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment.
3. Any compensation received to meet the cost of travel on tour or transfer.
4. Daily allowance received to meet the ordinary regular charges or expenditure you incur on account of absence from his regular place of duty.

A salaried taxpayer can choose the new tax regime at the beginning of FY 2020-21 and intimate their employer. The employee cannot change their choice anytime during the financial year. However, the change can be done at the time of filing the income tax return in July 2021. 

The due date for tax filing for the FY 2020-21 (AY 2021-22) is 30th Sep 2021 (extended from 31st July 2021). 

In case an employee does not choose the new tax regime at the beginning of the financial year, the employer will deduct tax (TDS) under the existing tax regime. Hence, a salaried taxpayer can opt-in and opt-out every year. That means you can choose the new tax regime in one year and choose the regular tax regime in another year.

A non-salaried taxpayer has to choose the new regime at the time of filing the tax return. They need not declare or intimate their choice to anyone at any time during the year. However, a non-salaried taxpayer cannot opt-in and opt-out of the new tax regime every year. Once a non-salaried opts out of the new tax regime, they cannot opt-in again for the new tax regime in the future.

In Example 2, for an income of INR 10 lakh, the existing tax regime is beneficial. 

In case an individual claims lower deductions for tax savings, towards health insurance, investment in NPS and so on, the new regime will be more beneficial as against individuals who utilise the tax saving investments. 

Also individuals with an income bracket between Rs.5-10 Lakh with lower claim of deductions will benefit from the new regime whereas individuals falling under higher income tax bracket above Rs.15 lakh of income per annum can benefit more from the existing regime by making tax saving investments. 

It is important to note that each taxpayer should calculate income tax, taking into account their tax-saving investments and then choose the regime.

In case of a self-occupied property, you cannot claim a deduction on interest for a housing loan under the new tax regime. The deduction of Rs 2.00 lakh allowed in the existing system is not available in the new tax regime. Also, you cannot set-off the loss of Rs 2 lakh from house property from your salary income. 

If you have let-out a house property, you can claim a deduction for interest paid on the housing loan. Do note that the new tax regime restricts the deduction to the taxable rent received from the property as against the old regime. In the new regime, you cannot set-off the loss arising from the house property due to excess of interest paid over the rental income. Also, you cannot carry forward the loss from house property to future years for set off.

In the case of a business income, an individual or HUF cannot claim set-off of the brought forward business loss or unabsorbed depreciation. 

The deductions not available under the new regime to the extent they relate to deductions/exemptions withdrawn.

If you are salaried, your employer might ask for a declaration from you to choose between the old or new tax regime.

For individuals with business income, Form 10IE can be filed before the due date of filing of ITR, i.e. 31st July or another date (in case due date is extended by the government)

For individuals having a salary income, Form 10IE can be submitted before or at the time of filing of ITR.

Basic details required to file Form 10IE are mentioned below:

• Name of the individual / HUF
• Confirmation of whether the individual or HUF have any income under ‘Profit or gains from business and profession.
• PAN number
• Address
• Date of birth/ date of incorporation
• Nature of business/ profession (Mandatory in case of business income)
• Confirmation in ‘yes/no’ of whether the taxpayer has any unit in IFSC (International financial service centre) as mentioned in sub-section (1A) of section 80LA. Suppose the answer is yes, then details of the unit to be provided. 
• Details of any previous Form 10IE filed.
• Declaration