Deductions & Exemptions Under the New Act

The good news first: nearly every deduction and exemption that existed under the old Act still exists under the new one — the amounts and eligibility rules are largely unchanged. What's different is where they're located in the statute, and one condition that matters more than the renumbering itself: which tax regime you're filing under.

Where Familiar Deductions Now Live

Old Provision	Covers	New Location
Section 80C	EPF, PPF, ELSS, life insurance premiums, NSC, tuition fees (₹1.5 lakh cap)	Section 123, read with Schedule XV
Section 80CCD	NPS contributions (including extra ₹50,000 under old 80CCD(1B))	Section 124
Section 80D	Health insurance premiums	Section 126
Section 24(b)	Home loan interest deduction	Section 25
Section 10 (HRA, gratuity, leave encashment, etc.)	Income exemptions	Schedule II

Schedule XV: Where Section 123's Details Live

Under the old Act, the many sums eligible for the ₹1.5 lakh 80C deduction were scattered across sub-sections, making the provision genuinely hard to read in one place. Under the new Act, Section 123 simply states the ₹1.5 lakh cap, while Schedule XV lists every eligible instrument — EPF, PPF, ELSS, life insurance premiums, NSC, five-year tax-saving fixed deposits, and children's tuition fees — in a single, organized table.

The deduction amount and eligible instruments are functionally unchanged — this is a readability improvement, not a policy change.

The Condition That Matters More Than the Renumbering

Here's the detail that actually affects your tax bill: Section 123 deductions (and most Chapter VIII deductions generally) are only available under the old tax regime. If you've opted into the new (concessional) tax regime — now under Section 202 — you cannot claim Section 123, Section 126, or most similar deductions at all, regardless of how much you invested.

Who Can Claim Section 123

Section 123 is available to individuals and Hindu Undivided Families (HUFs) — salaried employees, self-employed professionals, freelancers, and business owners can all claim it, provided they're filing under the old regime. It isn't available to companies, partnership firms, LLPs, AOPs, or BOIs.

Common Mistakes

1. Investing in 80C-eligible instruments while filing under the new regime. If you've opted for the new tax regime, contributions to PPF, ELSS, or life insurance still don't reduce your taxable income — the deduction simply isn't available under that regime, regardless of the investment.

2. Assuming deduction limits changed along with the section numbers. The ₹1.5 lakh cap under Section 123 and the health insurance limits under Section 126 are carried over exactly as they were under the old 80C and 80D.

Key Takeaway: Your familiar deductions — 80C, 80D, 24(b), HRA — all exist under new section numbers (123, 126, 25, and Schedule II respectively), with the same amounts and eligibility rules. The one thing that genuinely changes your outcome is which tax regime you file under — most of these deductions are old-regime-only. Want to know what mistakes to specifically avoid this filing season? See Common Mistakes to Avoid.

Frequently Asked Questions

Can I claim Section 123 under the new tax regime?

No — Section 123 deductions are only available if you've opted for the old tax regime. Under the new regime, this deduction isn't available regardless of your investments.

Did the ₹1.5 lakh limit under Section 123 change from the old 80C limit?

No — the ₹1.5 lakh cap carried over unchanged. Only the section number and the organization of eligible instruments (now in Schedule XV) changed.

Where do I find the exact list of instruments eligible under Section 123?

Schedule XV of the Income Tax Act, 2025 contains the complete, organized list — covering EPF, PPF, ELSS, life insurance premiums, NSC, tax-saving fixed deposits, and tuition fees among others.

Is home loan interest deduction still available?

Yes — what was Section 24(b) under the old Act is now Section 25 under the new Act, with the same deduction structure for interest on housing loans.