New Tax Regime: You can save tax in these 6 ways in the new tax regime! Check before filing ITR

Old vs New Tax Regime: It is not difficult to save in the new tax system, you just have to change your perspective. After the income tax exemption limit was raised to Rs 12 lakh, many people thought that there was no need for tax planning. But the truth is that if you invest wisely, you can build a strong future with low taxes.

Tax Examination under New Tax System: When the income tax exemption limit was increased to Rs 12 lakh under the new tax system in Budget 2025, lakhs of salaried people heaved a sigh of relief. Compared to the old tax structure, this new system is now not only reducing taxes but also providing relief from paperwork. But with this a question started arising that is there no need for tax planning now? Of course, there is, but now the ways have changed. Deductions like 80C, 80D and HRA may be missing like the old structure, but some ways are open in the new system as well, which can be used wisely to reduce the tax burden.

1. NPS is a strong means of saving tax in the new system

In the new tax system, annual income up to Rs 12.75 lakh is completely tax free. But what if the annual income exceeds this? Are you thinking that even if the tax is paid, it will be very little, then why worry? So change your thinking and consider saving tax through National Payment System (NPS).

It is possible that you may have thought about this and did not choose NPS thinking that money gets locked in NPS for a longer period. Thinking so, you are ignoring the important fact that NPS not only provides tax exemption but it is also a reliable means for retirement.

Under section 80CCD(2), the company can invest up to 14% of the basic salary in NPS. The good thing is that this investment made by the company in NPS is tax free. If you ask your company to transfer 14% of the basic salary to NPS, not only will your tax be reduced, but your retirement fund will also be strengthened. Moreover, after completing the age of 60, 60% of the total amount deposited in NPS is completely tax free.

2. Increase contribution to EPF, get double benefit

Often employees contribute only Rs 1,800 to the Employees Provident Fund (EPF) as per the formula of 12% of the minimum Rs 15,000, while they have the option to contribute the full 12% of their basic salary. Doing so increases retirement savings and also saves tax. The Economic Times quoted chartered accountant Nitesh Budhdev as saying that the contribution made by the company to the PF fund remains tax free.

So if there is scope for change in your salary structure, then increasing EPF contribution can be a wise step. But keep in mind that the combined contribution of NPS and EPF should not exceed Rs 7.5 lakh annually, otherwise the additional amount will become taxable.

3. Investment in the name of parents: A profitable deal, but caution is necessary

Some people invest their savings in the account of non-earning parents to save tax. Technically this is legal, but if the purpose is only to save tax, then it can be considered morally controversial. If it is done carefully, like declaring a gift and considering the money back as a gift, then this method can prove to be beneficial. But in cases of big investments, it becomes necessary to make a will, so that there is no legal dispute in future.

4. Leave FD, adopt Arbitrage Fund – Low tax, high return

If you invest in Fixed Deposits (FDs), then you have to bear a higher tax deduction. Interest on FDs is taxable every year, whereas the return in Arbitrage Fund is taxable only at the time of redemption, that too at a lower rate. If you choose Arbitrage funds instead of FDs and adopt methods like ‘gains harvesting’, then you will not have to pay any tax on capital gains up to ₹ 1.25 lakh every year. This will not only save tax but will also give better returns in the long term.

5. If you are a freelancer or consultant, take advantage of section 44ADA

Those who are not salaried are deprived of options like NPS or EPF. But section 44ADA is a golden opportunity for them. Under this scheme, only 50% of the total income is considered taxable. For example, if you earn Rs 20 lakh annually, then you will have to pay tax on only Rs 10 lakh. There is no need to provide proof of expenses, nor is there any compulsion to maintain books. This scheme is especially suitable for consultants, freelancers and retired professionals.

6. These are also ways to avoid tax in the new tax system

Even though classic deductions like 80C and House Rent Allowance (HRA) do not apply in the new system, some small but important deductions are still available. Free tea/coffee at office, office mobile, expenses on books, or training – all these are not taxable if they are related to your work. If you have given your house on rent, then the interest on home loan can also be deducted, but this facility applies only to ‘rented property’, not to the house you own.

Change the method, tax savings are still possible

The new system may give less deductions as compared to the old tax structure, but it does not completely eliminate tax planning. It is wise to invest not just to save tax, but for the bigger goals of your life. The strategies that are useful for your retirement, children’s education or emergency, are the real tax planning. Understand life before tax – the benefits will come automatically.

The post New Tax Regime: You can save tax in these 6 ways in the new tax regime! Check before filing ITR first appeared on informalnewz.

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