‘Simplicity could cost you ₹2-3 lakh a year’: CA warns of hidden costs in new tax regime

The new tax regime, widely promoted as a “simpler” alternative by the government, may come at a steep and often overlooked financial cost, warns Chartered Accountant Nitin Kaushik. In a detailed advisory posted on X (formally Twitter), Kaushik highlights that taxpayers switching to the new regime without a thorough cost-benefit analysis could be losing up to ₹2-3 lakh annually in tax savings. 

“Simplicity shouldn't cost you peace of mind or your money,” Kaushik cautioned. 

What you lose under new regime 

According to Kaushik, a wide array of popular exemptions and deductions are not allowed under the new tax system, including: 

• Section 80C: ₹1.5L (investments in LIC, ELSS, PPF, home loan principal, etc.) 
• 80CCD(1B): ₹50k (additional NPS contribution) 
• 80D: ₹25k-₹1L (health insurance premiums) 
• Interest on Education Loan (80E): No upper limit 
• Interest on EV Loan (80EEB): ₹1.5L 
• 80G: Donations to eligible institutions 
• 80TTA/80TTB: ₹10k-₹50k (interest on savings) 
• HRA Exemption, LTA, Home Loan Interest, Professional Tax, and more. 

What you still get 

While the new regime eliminates many deductions, it retains a few: 

• ₹50,000 Standard Deduction 
• Employer’s NPS contribution under 80CCD(2) 
• Gratuity exemption up to ₹20L 
• Leave encashment, commuted pension, and retirement benefits 

The real cost: Up to ₹3 lakh annually 

Kaushik provides a practical example for someone in the 30% tax bracket: Total Exemptions in Old Regime: ₹6.6L Tax Saved: ₹1.98L annually. With additional deductions (like EV loan, senior citizen health premiums), annual tax savings can soar to ₹2.4L-₹3L. 

Kaushik admits the new regime may benefit: 

• Young earners with minimal deductions 
• High-income individuals with no home loans or tax-saving investments 

But for most salaried professionals and families, especially those who actively invest and plan, the old regime remains significantly more rewarding. 

“Do the math. Choose what fits your situation — not what’s trending,” he concludes. 

While the new tax regime looks cleaner on paper, Kaushik urges individuals to resist switching blindly. “The old regime rewards those who plan their money wisely,” he asserts — a reminder that what seems simple at first glance could come with a hidden price tag.