ITR Filing 2026: These 15 deductions you cannot claim under the New Tax Regime

As taxpayers begin filing their Income Tax Returns (ITRs) for Assessment Year 2026-27, choosing between the old and new tax regimes remains one of the most important decisions. While the new tax regime offers lower tax rates and has become the default option, it also requires taxpayers to forgo several popular exemptions and deductions available under the old regime.

Tax experts say many taxpayers mistakenly assume that deductions such as HRA, Section 80C investments or home loan interest continue to be available under the new regime, leading to incorrect tax calculations. Here's a look at the major deductions you cannot claim if you opt for the new tax regime.

1. House Rent Allowance (HRA)

The exemption available under Section 10(13A) for House Rent Allowance is not available under the new tax regime.

2. Leave Travel Concession (LTC)

Tax exemption on Leave Travel Concession under Section 10(5) cannot be claimed.

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3. Most allowances

Most allowances covered under Section 10(14), except those specifically permitted under the law, are not eligible.

4. Entertainment allowance

The deduction available under Section 16(ii) has been withdrawn under the new regime.

5. Professional tax deduction

Employees cannot claim a deduction for professional tax paid under Section 16(iii).

6. Home loan interest on self-occupied property

The deduction of up to ₹2 lakh on interest paid for a self-occupied house under Section 24(b) is unavailable.

7. Section 80C deductions

Popular tax-saving investments under Section 80C, including Public Provident Fund (PPF), Employees' Provident Fund (EPF), ELSS mutual funds, National Savings Certificate (NSC), tax-saving fixed deposits, Sukanya Samriddhi Yojana and life insurance premiums, cannot be claimed.

8. Section 80D deduction

Premiums paid towards health insurance policies under Section 80D are not deductible.

9. SEZ deduction

Businesses cannot claim deductions available under Section 10AA for Special Economic Zone units.

10. Additional depreciation

The benefit under Section 32(1)(iia) for investment in new plant and machinery is unavailable.

11. Investment in notified backward areas

The deduction under Section 32AD for investment in plant and machinery in notified backward regions is not available.

12. Specified business deductions

Deductions under Sections 33AB and 33ABA, available for specified businesses such as tea, coffee, rubber and petroleum exploration, are not permitted.

13. Scientific research deductions

Several deductions relating to donations and expenditure on scientific research under Section 35 are unavailable.

14. Capital expenditure deductions

Businesses cannot claim deductions under Section 35AD for specified capital expenditure.

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15. Agriculture Extension Project deduction

The deduction available under Section 35CCC for expenditure on agriculture extension projects is also unavailable.

Deduction/Exemption	Available in New Tax Regime?
House Rent Allowance (HRA)	❌ No
Leave Travel Concession (LTC)	❌ No
Section 80C (PPF, EPF, ELSS, NSC, LIC, Tax-saving FD, SSY, etc.)	❌ No
Section 80D (Health insurance premium)	❌ No
Home loan interest on self-occupied house (Section 24b)	❌ No
Professional tax deduction	❌ No
Entertainment allowance	❌ No
SEZ deduction (Section 10AA)	❌ No
Additional depreciation (Section 32(1)(iia))	❌ No
Investment in notified backward areas (Section 32AD)	❌ No
Scientific research deductions (Section 35)	❌ No
Capital expenditure deduction (Section 35AD)	❌ No
Agriculture Extension Project (Section 35CCC)	❌ No
Standard deduction for salaried employees (₹75,000)	✅ Yes
Employer's NPS contribution [Section 80CCD(2)]	✅ Yes
Home loan interest on let-out property	✅ Yes
Gratuity	✅ Yes
Leave encashment	✅ Yes
Agniveer Corpus Fund contribution (Section 80CCH)	✅ Yes
Transport allowance for differently abled employees	✅ Yes
Voluntary Retirement Scheme (VRS) exemption	✅ Yes
Gifts up to ₹50,000 (subject to conditions)	✅ Yes
Meal vouchers (up to prescribed limits)	✅ Yes

What can you still claim?

The new tax regime is not completely devoid of tax benefits. Salaried employees can continue to claim the ₹75,000 standard deduction, while employer contributions to the National Pension System (NPS) under Section 80CCD(2) remain deductible.

Taxpayers can also claim deductions for home loan interest on let-out properties, gratuity, leave encashment, employer contributions to the Agniveer Corpus Fund, transport allowance for differently abled employees and certain Voluntary Retirement Scheme (VRS) benefits, subject to applicable conditions.

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According to tax experts, the choice between the old and new tax regimes depends on an individual's income profile and eligible deductions. Taxpayers who claim substantial benefits under HRA, Section 80C, Section 80D or home loan interest may find the old regime more advantageous, while those with limited deductions may benefit from the lower tax rates offered under the new regime. Before filing an ITR, experts recommend comparing tax liability under both regimes to determine the more tax-efficient option.