Under the new tax regime in India, saving income tax is more limited compared to the old regime because most of the deductions and exemptions have been removed. However, there are still some strategies you can use:
1. Understand the New Tax Regime Slabs
The new tax regime offers lower tax rates but removes popular exemptions like:
- HRA (House Rent Allowance)
- 80C deductions for investments (like PPF, ELSS, etc.)
- Standard deduction for salaried individuals.
New Tax Rates (FY 2023-24):
| Income Slab | Tax Rate |
| ₹0 – ₹3,00,000 | 0% |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
2. Use the Standard Deduction
The ₹50,000 standard deduction for salaried individuals was introduced in Budget 2023 under the new regime. Ensure this is accounted for in your tax computation.
3. Invest in the National Pension Scheme (NPS)
Under Section 80CCD(2):
- You can claim up to 10% of your salary (basic + DA) if your employer contributes to your NPS account.
- This benefit is available under the new regime.
4. Tax-Free Income Threshold
If your taxable income is up to ₹7,00,000, you can avail of the rebate under Section 87A, making your tax liability zero.
5. Optimize by Switching Between Regimes
If you’re a salaried individual:
- Evaluate your savings and investment habits to decide whether the new or old regime is more beneficial.
- You can choose the regime annually while filing your returns.
For business owners or self-employed individuals:
- Once the new regime is opted for, it stays fixed until you cease business income.
6. Check for Specific Allowances
Certain allowances, like those for conveyance or travel, may still be tax-free under specific conditions. Verify with your employer’s HR or payroll team.
7. Charitable Contributions
Deductions for charitable donations under Section 80G may still be available under some circumstances.
8. Health Insurance Benefits
Employers offering group health insurance or reimbursements may help reduce taxable income.
9. Affordable Housing Loans
Interest on housing loans (under Section 80EEA) for first-time affordable housing buyers may still offer deductions.
Tips:
- Use online tax calculators to compare the benefits of the old vs. new regime.
- Consult a tax advisor for personalized strategies.
Would you like more help with specific income ranges or tax-saving tips?
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