Salaried employees under the old regime are entitled to a standard deduction of ₹50,000 or the amount of their salary — whichever is lower. This deduction directly reduces taxable salary income without requiring any proof of expenditure.

While this is lower than the ₹75,000 standard deduction offered under the new regime, it remains a meaningful baseline benefit for every salaried taxpayer who opts for the old regime.

Employees opting for the old regime can continue to claim exemptions for various allowances, provided the specific conditions are met:

• House Rent Allowance (HRA): Exempt for rent expenses on residential accommodation not owned by the employee. The exempt amount under Rule 279 is the least of: (i) actual HRA received, (ii) rent paid minus 10% of salary, or (iii) 40% / 50% of salary (50% for metro cities).
• Leave Travel Concession (LTC): Exemption for the value of travel concession received by the employee and their family for travel within India — available for two journeys in a block of four calendar years.
• Other Special Allowances: Exemptions for allowances granted to meet expenses wholly and necessarily incurred in the performance of official duties — such as travel allowance on tour, helper allowance, or uniform allowance.

Under the old regime, individuals can claim a deduction for interest payable on capital borrowed for the acquisition or construction of a self-occupied residential property. This deduction is capped at ₹2,00,000 per year, subject to the condition that construction is completed within five years from the end of the financial year in which the capital was borrowed.

For properties that are let out, the entire interest is deductible (without the ₹2,00,000 ceiling), subject to certain conditions.

Taxpayers under the old regime are permitted to set off losses from house property against their salary income. This commonly arises when home loan interest payments exceed the rental income (or notional rent) from a property.

This benefit is specifically denied to taxpayers who compute their income under the default new tax regime — making it a significant exclusive advantage of the old regime for homeowners with housing loans.

The old regime preserves the ability to claim a wide range of investment and expense-based deductions — most of which are disallowed under the new regime:

• Section 123 (PF / LIC / Equity): Aggregate deduction of up to ₹1,50,000 for life insurance premiums, contributions to a recognised provident fund, and specified equity shares or debentures.
• Section 126 (Health Insurance): Deduction for health insurance premiums or preventive health check-ups — up to ₹25,000 for individuals (or ₹50,000 for senior citizens). Higher limits apply where parents are also insured.
• Section 129 (Education Loan Interest): Deduction for interest paid on loans taken for higher education — for the employee or their dependants — with no monetary cap, available for up to 8 years.
• Section 133 (Donations): Deduction for donations made to specified funds or charitable institutions, typically at 50% or 100% of the donated amount depending on the recipient.

For resident individuals under the old regime, a tax rebate is available if their total income does not exceed ₹5,00,000. The rebate amount is 100% of the income tax payable, subject to a maximum of ₹12,500 — effectively making income up to ₹5,00,000 tax-free for qualifying residents.

Note: The significantly higher rebate of ₹60,000 (making income up to ₹12,00,000 effectively tax-free) is exclusive to the new regime and is not available under the old regime.