New Tax Regime 2025: 6 Easy Ways to Save Income Tax:

Taxpayers are now getting ready for the preparation of their Income Tax Returns (ITR) for the financial year 2024-25 when the new financial year will commence on April 1. One substantial choice that taxpayers will have to make is whether they would prefer to go with the old or new tax regime based on the income and investments they hold. These new tax regime approaches to save up some extra funds might resonate with you:

1. More Standard Deduction

The new tax regime will become effective beginning from FY 2025-26, with an increase of standard deduction from ₹50,000 to ₹75,000 meaning there is an additional ₹25,000 in tax saving compared to the old regime.

2. Contribution from Employer to NPS (Section 80CCD (2))

Employees who work on a salary basis are favored with a tax exemption if their employer puts in money in their NPS account. The exemption for government employees is up to 14% of Basic + DA, and for private sector employees it is 10%.

3. Agniveer Corpus Fund Contributions (Section 80CCH(2))

Under Agneepath scheme, contributions made by Agniveer along with the government's portions are tax exempt. Any amounts getting paid out to beneficiaries or nominees from the corpus is also exempt from tax under both old and new regimes.

4. Family Pension Exemption (Section 57(iia))

Pensioners who become bereaved and depend on their [spouse’s/partner’s] pension are granted tax exemptions. Under the new tax regime, one-third of the family pension is exempt, or ₹25,000 whichever is lesser, marking a significant socio-economic improvement for surviving family members.

5. Transport and Conveyance Allowance

Disabled employees are entitled claim exemption for up to ₹3,200 per month for travel between the office and their residence. Reimbursement of expenses spent relating to office transportation is non-taxable.

6. Other Deductions/Exemptions Under
Section 10

The other section exempted under the new regime is section 10. Tax was modified to those who qualify with the voluntary retirement scheme (VRS) where up to ₹5 lakh is tax exempt. Government employees are fully exempted from taxes on gratuity while private employees are granted some exemption under certain terms. Furthermore, encashment of leaves at the time of retirement or resignation is exempted from taxes up to ₹25 Lakh and taxed beyond that amount.

Decision Of Final Draft With Old And New Tax Regimes

The former regime is likely more appropriate for individuals who can maximize tax savings through extensive tax-saving deductions, investment vehicles and other tax-advantaged accounts. He or she would prefer the latter if a taxpayer has no major investment-related deductions.