ITR filing 2025: The decision between the old and new tax regimes hinges on thoroughly understanding the available benefits. While the new tax regime is often characterised by its simplified slabs and lower rates, it doesn’t entirely eliminate opportunities for tax planning. By examining the remaining provisions, such as the standard deduction, NPS contributions, and exemptions for specific groups, taxpayers can make an informed choice that optimizes their financial situation.
“Despite fewer deductions, the new tax regime still offers savings,” says Abhinav R. Jain (AdCounty Media). “Standard deduction, employer NPS contributions, and specific exemptions for seniors and businesses remain.”
Deductions that can help taxpayers maximize savings under the new tax regime
Standard Deduction
Standard Deduction refers to a fixed amount that taxpayers can subtract from their total income to reduce the amount of income subject to taxation. This helps to reduce the taxable income, thereby lowering the amount of taxes owed. Salaried individuals can claim a standard deduction under the new tax regime. A standard deduction of ₹75,000 is available for salaried individuals. FM Nirmala Sitharaman hiked this amount from ₹50,000 to ₹75,000 while presenting the Union Budget 2024 in July.
National Pension Scheme (NPS)
The National Pension Scheme (NPS) is a government-sponsored pension scheme that provides financial security to individuals after retirement. Contribute to NPSF under Section 80CCD. You can deduct up to 14 per cent of your basic salary invested in NPS. The employer’s contribution to the National Pension System (NPS) is still eligible for deduction.
Employee’s Provident Fund (EPF)
The Employee’s Provident Fund (EPF) is a government-backed retirement savings scheme designed to help salaried employees save for retirement and ensure financial security after retirement. It is managed by the Employees’ Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment.Under the new income tax regime, the employer’s contribution to EPF (12 per cent of basic salary) is also tax-deductible.
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