DEDUCTIONS / EXEMPTIONS WOULD NOT BE ALLOWED IN NEW TAX REGIME

Types of Deductions/Exemptions not to be Allowed In New Tax Regime

If an individual or HUF opts for concessional rates of taxes under section 115BAC(1) i.e New Tax Regime then While computing total Income there are certain deductions/exemptions that would not be allowed

Deductions/Exemptions not allowed are

Section	Exemption/Deduction
10(5)	Leave travel concession
10(13A)	House rent allowance
10(14)	Exemption in respect of special allowances or benefit to meet expenses relating to duties or personal expenses (other than those as may be prescribed for this purpose) (See additional point 1 )
10(17)	Daily allowance or constituency allowance of MPs and MLAs
10(32)	Exemption in respect of income of minor child included in the income of parent
10AA	Tax holiday for units established in SEZ
16	Standard deduction under the head “Salaries” Entertainment allowance Professional tax
24(b)	Interest on loan in respect of self-occupied property
32(1)(iia)	Additional depreciation
35(1)(ii),(iia),(iii) or 35(2AA)	Deduction in respect of contribution to notified approved research association/ university/ college/ other institutions for scientific research [Section 35(1)(ii)] approved Indian company for scientific research [Section 35(1)(iia)] notified approved research association/ university/ college/ other institutions for research in social science or statistical research [Section 35(1)(iii)] An approved National laboratory/ university/ IIT/ specified person for scientific research undertaken under an approved programme [Section 35(2AA)]
35AD	Investment linked tax incentives for specified businesses
57(iia)	Deduction in respect of family pension
80C to 80U	Deductions under Chapter VI-A (other than employers contribution towards NPS under section 80CCD(2) and deduction in respect of employment of new employees under section 80JJAA).

Certain losses not allowed to be set-off

While computing total income, set-off of any loss

carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred above; or
Under the head house property with any other head of income; would not be allowed.

Depreciation or additional depreciation

Depreciation u/s 32 is to be determined in the prescribed manner. Depreciation in respect of any block of assets entitled to more than 40%, would be restricted to 40% on the written down value of such block of assets. Additional depreciation u/s 32(1)(iia), however, cannot be claimed.

Exemption or deduction for allowances or perquisite

While computing total income, any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being force in India would not be allowed.

Additional points

An individual opting for the provisions of section 115BAC would be entitled for

travelling allowance (i.e., allowance granted to meet the cost of travel on tour or transfer)
daily allowance (i.e., allowance granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty)
conveyance allowance (i.e., allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit, where free conveyance is not provided by the employer); and
exemption in respect of transport allowance granted to an employee who is blind or deaf and dumb or orthopedically handicapped with disability of the lower extremities of the body to the extent of 3,200 p.m.
An individual, being an employee opting for section 115BAC, would not be entitled for exemption of perquisite of free food and non-alcoholic beverages provided by an employer through paid vouchers
In case of an individual or HUF opting for section 115BAC, total income should be computed without set-off of any loss brought forward or depreciation from any earlier assessment year, where such loss or depreciation is attributable to any of the deductions listed in (1) above [Such loss and depreciation would be deemed to have been already given effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year]

Where there is a depreciation allowance in respect of a block of asset from an earlier assessment year attributable to additional depreciation u/s 32(1)(iia), which has not been given full effect to prior to A.Y. 2021-22 and which is not allowed to be set-off in the A.Y.2021-22 due to exercise of option u/s 115BAC from that year, corresponding adjustment shall be made to the WDV of such block of assets as on 1.4.2020 in the prescribed manner i.e., the WDV as on 1.4.2020 will be increased by the unabsorbed additional depreciation not allowed to be set-off.

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CHETNAA GOYAL

FCA, B.COM, More than 10 years of Experience in Direct Tax