Don’t Assume the New Tax Regime is Zero-Deduction: Here’s How to Still Save
Think the new tax regime means you can’t claim any deductions? Think again. While it simplifies the tax structure by eliminating most benefits, a number of key deductions and exemptions are still available for Assessment Year 2025-26, potentially saving you a significant amount on your tax bill.
Here are 10 ways you can legally cut your tax bill under the new regime:
- Standard Deduction: Both salaried employees and pensioners can claim a flat ₹50,000 standard deduction.
- Tax Rebate (Section 115BAC): If your income is up to ₹7 lakh, you will have no tax liability thanks to a ₹25,000 rebate.
- LTCG on Equity: Equity investors, take note: long-term capital gains (LTCG) on shares and equity mutual funds are now taxed at 12.5% for gains exceeding ₹1.25 lakh, effective July 23, 2024.
- NPS Contributions (Section 80CCD(2)): Employer contributions to your National Pension System (NPS) account are still deductible within specified limits.
- Agniveer Corpus Fund: Contributions made to the Agniveer Corpus Fund are also deductible.
- Health Insurance (Section 80D): Health insurance premiums for you, your spouse, children, and parents remain deductible under Section 80D.
- Retirement Benefits: Benefits like gratuity and leave encashment received at retirement are still tax-exempt.
- Transport Allowance for the Disabled: The transport allowance for disabled individuals remains fully exempt.
- Family Pension: Pensioners receiving a family pension can claim a deduction of up to ₹15,000 or one-third of the pension, whichever is lower.
- Additional Employee Cost (Section 80JJAA): For business owners, a deduction is available for additional employee costs, encouraging new hires.
The bottom line is simple: The new tax regime isn’t entirely deduction-free. Before you file your return, make sure to review what’s still allowed—it could make a big difference in your final tax bill.
