Don’t Assume the New Tax Regime is Zero-Deduction: Here’s How to Still Save
Thank you for reading this post, don't forget to subscribe!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.
