Which deductions survive in the new tax regime: 80CCD(2), 80CCH and 80JJAA while 80C and HRA drop

The Income Tax Department's own guidance on the two regimes leaves no room for interpretation: "In new tax regime, Chapter-VIA deductions cannot be claimed, except deduction u/s 80CCD(2)/80CCH/80JJAA as per the provision of Section 115BAC of the Income Tax Act, 1961." Chapter VI-A contains more than thirty deduction provisions. Exactly three of them survive inside the default regime, and two of those three are unavailable to most salaried filers.

That is the single fact that decides the regime question for a salaried taxpayer in FY 2025-26. The comparison is not "which regime has lower rates" but "how much of my old-regime deduction stack is still legal after Section 115BAC removes Section 80C at Rs 1,50,000, Section 80D at Rs 25,000 and the House Rent Allowance exemption in full".

What the Section Says

The Finance Act 2023 amended Section 115BAC with effect from AY 2024-25 to make the new regime the default for individuals, HUFs, AOPs other than co-operative societies, BOIs and artificial juridical persons. Nobody has to opt in. A taxpayer who wants the old regime has to opt out, and a salaried employee who tells the employer at the start of the year still has to record the choice separately in the return before the Section 139(1) due date.

Three things survive the cut, and they are worth separating carefully.

The standard deduction is the one people forget to count, because it is not a Chapter VI-A deduction at all. It sits in Section 16 of the Act, which Section 115BAC does not touch, and at Rs 75,000 in the new regime it is Rs 25,000 larger than the old-regime figure of Rs 50,000.

Section 80CCD(2) is the only survivor most employees can actually use

The Department's AY 2026-27 guidance for salaried individuals lists employer contribution to the pension scheme under Section 80CCD(2) at 14 per cent of salary. The equivalent ceiling in the old regime is 10 per cent of basic plus dearness allowance, so an employee whose company contributes the full 14 per cent gets a larger deduction inside the new regime than outside it. On a basic plus DA of Rs 9,00,000 that gap is Rs 1,26,000 against Rs 90,000, a difference of Rs 36,000 of deductible salary.

This is an employer-routed deduction. It is claimed on what the company pays into the NPS Tier-1 account, not on what the employee contributes. Section 80CCD(1B), the additional Rs 50,000 NPS deduction, is not allowed in the new regime and survives only in the old regime, and Section 80CCD(1) sits inside the Rs 1,50,000 Section 80C ceiling that Section 115BAC removes outright. Our NPS tax benefit calculator separates the three.

Section 80CCH and Section 80JJAA are narrow by design

Section 80CCH covers the amount deposited in the Agniveer Corpus Fund. The Department's ITR-2 user manual is explicit that when a taxpayer has not opted out of Section 115BAC, "only Deductions under Section 80CCD (2) - Employers Contribution to Tier-1 NPS Account and Section 80CCH - amount deposited in the Agniveer Corpus Fund will be enabled". For anyone outside the Agnipath Scheme, the field simply does not open.

Section 80JJAA is a business deduction for additional employee cost and it is not claimable against salary. The CBDT e-Filing validation rules for ITR-5 for AY 2026-27 put it plainly: "Part C deductions under chapter VI-A except 80JJAA & 80LA(1A) cannot be claimed by assessee opting for 115BAD / 115BAE / 115BAC(1A)." The same document caps it, at rule 657, so that the "Deduction u/s 80JJAA in Sl.no.2k cannot be more than non speculative and non specified business income and non presumptive income in Schedule VIA". A presumptive filer has no room for it.

What stops at the regime boundary

On rent, the Department's published answer runs: "Under the old tax regime, House Rent Allowance (HRA) is exempted under section 10(13A) for salaried individuals. However, this exemption is not available in the new tax regime." On housing interest the wording is equally flat: "In the new tax regime, 'Interest on borrowed capital for Self-occupied property' is not allowed as a deduction from Income from House property as per the provision of Section 115BAC of the Act, 1961." Interest on a genuinely let-out property still runs against that property's rental income; it is the self-occupied claim of up to Rs 2,00,000 that disappears. If you are testing a rent claim, the HRA exemption calculator and the HRA glossary entry show what the old regime would have given you.

Worked Example

Take a salaried taxpayer in Delhi for FY 2025-26 with a Form 16 gross salary of Rs 18,00,000, made up of basic plus DA of Rs 9,00,000, HRA of Rs 3,60,000, other taxable allowances of Rs 4,14,000 and an employer NPS contribution of Rs 1,26,000, which is 14 per cent of basic plus DA. Rent paid is Rs 30,000 a month, or Rs 3,60,000 for the year.

The HRA figure is the least of the three statutory tests: actual HRA of Rs 3,60,000, rent paid less 10 per cent of basic at Rs 2,70,000, and 50 per cent of basic for a metro at Rs 4,50,000. The new-regime tax follows the FY 2025-26 slab structure of nil to Rs 4,00,000, 5 per cent to Rs 8,00,000, 10 per cent to Rs 12,00,000 and 15 per cent to Rs 16,00,000, which the Department's AY 2026-27 table expresses as Rs 60,000 plus 15 per cent of income above Rs 12,00,000.

The result is a saving of Rs 43,836 in the new regime despite losing Rs 4,95,000 of old-regime deductions. Two things do the work: the Rs 25,000 larger standard deduction plus the Rs 36,000 wider Section 80CCD(2) ceiling, and slab rates that reach 30 per cent only above Rs 24,00,000 rather than above Rs 10,00,000. Run your own numbers through the old versus new regime calculator or the new regime calculator before you commit.

The arithmetic flips only when the old-regime stack is unusually deep. A taxpayer claiming the full Rs 1,50,000 under Section 80C, Rs 50,000 under Section 80CCD(1B), Rs 2,00,000 of self-occupied interest under Section 24(b) and a large HRA exemption can still come out ahead, which is why the answer has to be computed rather than assumed each year.

Common Mistakes

1. Claiming Section 80CCD(1B) alongside the new regime. The Rs 50,000 NPS top-up is an old-regime deduction. The ITR utility will not enable the field once Section 115BAC applies.
2. Confusing Section 80CCD(2) with Section 80CCD(1). Only the employer's contribution survives. The employee's own NPS contribution rides inside the Rs 1,50,000 Section 80C limit and goes with it.
3. Applying the 14 per cent ceiling in the old regime. The old-regime limit on employer NPS is 10 per cent of basic plus dearness allowance, so Rs 36,000 of the Rs 1,26,000 in the example above would be taxable there.
4. Assuming the standard deduction is still Rs 50,000. In the new regime for FY 2025-26 it is Rs 75,000; Rs 50,000 is the old-regime figure.
5. Treating Section 80JJAA as a salary deduction. It runs against non-speculative business income under the ITR validation rules, and a Section 44AB audit report is part of the claim.
6. Forgetting that surcharge behaves differently. Above Rs 5 crore the new regime caps surcharge at 25 per cent, against 37 per cent in the old regime, with the 10 per cent, 15 per cent and 25 per cent steps at Rs 50 lakh, Rs 1 crore and Rs 2 crore common to both.
7. Missing the rebate. Under Section 87A a resident individual with total income up to Rs 12,00,000 pays nothing in the new regime, on a rebate of up to Rs 60,000, as covered in our note on the Section 87A rebate and in the tax rebate glossary entry.

FAQ

Which Chapter VI-A deductions are allowed in the new tax regime?

Only Section 80CCD(2) for the employer's NPS contribution, Section 80CCH for the Agniveer Corpus Fund and Section 80JJAA for additional employee cost in a business. The Income Tax Department states that all other Chapter VI-A deductions cannot be claimed under Section 115BAC.

Does the standard deduction still apply in the new regime?

Yes. It sits in Section 16 of the Act, not Chapter VI-A, and for FY 2025-26 it is Rs 75,000 in the new regime against Rs 50,000 in the old regime.

Can I claim HRA under the new regime?

No. The Department's position is that the Section 10(13A) exemption "is not available in the new tax regime". A taxpayer who wants it must opt out into the old regime in the return.

Is home loan interest allowed under Section 115BAC?

Interest on borrowed capital for a self-occupied property is not allowed as a deduction from income from house property in the new regime. Interest on a let-out property is still set against that property's income.

How much employer NPS can I claim under Section 80CCD(2)?

Up to 14 per cent of salary, meaning basic plus dearness allowance, in the new regime. The old-regime ceiling is 10 per cent, so on a basic plus DA of Rs 9,00,000 the new regime allows Rs 1,26,000 against Rs 90,000.

Can a salaried person claim Section 80JJAA?

No. It is a deduction against non-speculative, non-presumptive business income, available to a business audited under Section 44AB, and the ITR validation rules cap it at that business income.

Do I have to opt in to the new regime?

No. It has been the default since AY 2024-25 under the Finance Act 2023 amendment to Section 115BAC. Opting out is what requires an election, recorded in the return by the Section 139(1) due date.