Understanding ITR Filing for FY26: Key Deductions and Benefits

As the ITR filing season for FY26 unfolds, taxpayers must navigate the new tax regime's deductions and exemptions. This article highlights essential tax benefits, including the basic exemption limit, rebates, and deductions available for NPS contributions and home loans. Understanding these provisions can help taxpayers optimize their returns and avoid missing out on legitimate tax advantages. Discover how to effectively manage your taxable income and ensure compliance with the latest tax regulations.

By Narendra Chaudhary Jun 10, 2026, 18:56 IST

ITR Filing for Assessment Year 2026-27

ITR Filing FY26: As the income tax return (ITR) filing period for the Assessment Year (AY) 2026-27 progresses, it is crucial for taxpayers choosing the new tax regime to thoroughly examine the available deductions and exemptions. While this new system is often perceived as simpler with fewer tax benefits compared to the previous regime, it still provides various options to lower taxable income and enhance tax efficiency. Familiarity with these provisions can assist taxpayers in submitting accurate returns and ensuring they do not overlook valid tax advantages.

According to Section 115BAC, individual taxpayers under 60 years are taxed based on a revised slab system. The new regime sets a basic exemption threshold of Rs 4 lakh, with tax rates increasing progressively as income rises. Furthermore, taxpayers can receive a rebate of up to Rs 60,000 under Section 87A, allowing resident individuals with taxable income up to Rs 12 lakh to effectively incur no tax liability. For salaried individuals, the advantage is even more pronounced due to the standard deduction of Rs 75,000, which makes an annual income of up to Rs 12.75 lakh effectively tax-free under this regime. This simplified tax structure has prompted many to transition from the old regime, especially those who do not utilize multiple deductions and exemptions.

Deductions Available Under The New Tax Regime

A prevalent myth is that the new tax regime abolishes all deductions. Although many popular tax-saving options are not available, certain deductions still apply. One such benefit pertains to employer contributions to the National Pension System (NPS). Under Section 80CCD(2), employees can claim deductions for contributions made by their employer to their NPS account, up to 14% of their salary, regardless of whether the employer is from the public or private sector. Additionally, individuals enrolled in the Agnipath Scheme can claim deductions under Section 80CCH for contributions made to the Agniveer Corpus Fund, including those made by the Central Government on their behalf.

Home Loan And Pension-Related Tax Benefits

Taxpayers who own rental properties can still claim deductions on home loan interest under Section 24(b), with no specified upper limit on the interest amount that can be claimed. However, losses from 'Income from House Property' cannot be offset against income from other sources or carried forward to subsequent years under the new regime. Family pension recipients are also entitled to a deduction, allowing them to claim either Rs 25,000 or one-third of the pension amount received, whichever is lower, when calculating taxable income. Salaried individuals continue to benefit from a standard deduction of Rs 75,000 under the new tax regime, which directly reduces taxable income and can significantly decrease tax liability for many employees. The regime also preserves essential retirement-related exemptions, including tax benefits on gratuity under Section 10(10), leave encashment under Section 10(10AA), and compensation received through a Voluntary Retirement Scheme (VRS) under Section 10(10C), all subject to specific conditions and limits.