Is professional tax deductible in new tax regime india fy 2025-26 ?
No, professional tax (PT) is not deductible under the new tax regime for FY 2025-26..
While salaried individuals and pensioners can claim a standard deduction of ₹75,000 under the new regime, the other specific deductions under Section 16—namely Professional Tax (Section 16(iii)) and Entertainment Allowance (Section 16(ii))—remain unavailable.
Key Deductions Comparison (FY 2025-26)
| Deduction Type | Old Tax Regime | New Tax Regime |
|---|---|---|
| Standard Deduction | ₹50,000 | ₹75,000 |
| Professional Tax (PT) | Deductible (up to ₹2,500) | Not Deductible |
| Section 80C (PPF, LIC, etc.) | Up to ₹1.5 Lakh | Not Deductible |
| HRA Exemption | Available | Not Deductible |
Why PT is Not Deductible in the New Regime
- Simplified Structure: The new tax regime is designed with lower tax rates in exchange for removing most exemptions and deductions.
- Section 16 Restrictions: Under the new regime, only the Standard Deduction (Section 16(ia)) is permitted from the “Salaries” head. The provision for Professional Tax under Section 16(iii) is explicitly excluded.
- Effective Zero Tax Limit: Despite the lack of PT deduction, salaried individuals earning up to ₹12.75 lakh pay zero tax under the new regime due to the ₹75,000 standard deduction and an enhanced rebate of ₹60,000 under Section 87A.