NEW DELHI — India’s new tax regime is gaining ground. Specifically, the Union Budget 2025 revised the slab rates to favor the middle class. While the old system had more perks, the new one is simpler. However, you can still save money if you use the right tools. Consequently, taxpayers can lower their bills by using five key provisions.

1. The ₹75,000 Standard Deduction

The easiest benefit for FY 2025-26 is the standard deduction. Notably, the limit for salaried staff and pensioners is now ₹75,000. Because this is fixed, you do not need to show receipts. Therefore, it lowers your taxable income without any paperwork.

2. Corporate NPS (Section 80CCD(2))

Your own NPS deposits no longer save tax here. But employer contributions are still a big win. Specifically, companies can now put up to 14% of your basic pay into NPS. Furthermore, this amount is not taxed in your hands. As a result, you build wealth for later while paying less tax now.

3. The ₹12 Lakh Rebate Rule

The 2025 Budget changed the Section 87A rebate. Now, if your taxable income is under ₹12 lakh, you pay zero tax. In fact, when you add the ₹75,000 deduction, you can earn ₹12.75 lakh and still pay nothing. Still, if you earn more, you must plan well to stay in this range.

4. Home Loan Interest on Rented Property

The new regime does not allow deductions for homes you live in. However, you can still claim interest for let-out properties. Specifically, Section 24 allows a cut of up to ₹2 lakh. Thus, this helps people who invest in rental real estate.

5. Retirement and Payout Perks

Some payouts stay tax-free when you retire. For instance, gratuity and leave encashment have high limits. Also, employer EPF funds are mostly exempt. In summary, the new system works best for those who use company-linked benefits.

FY 2025-26 New Regime Tax Slabs

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The post India’s 2026 Tax Guide: 5 Ways to Cut Your Bill Under the New Regime first appeared on Rightsofemployees.com.

The Math Behind the “Tax-Free” ₹12.75 Lakh

The new regime’s appeal lies in a combination of revised slabs, an enhanced rebate, and a higher standard deduction:

• Standard Deduction: Increased to ₹75,000 for salaried taxpayers and pensioners.

• Section 87A Rebate: The rebate limit was hiked to ₹60,000, meaning there is zero tax payable on taxable income up to ₹12 lakh.

• Effective Limit: For a salaried professional, a gross income of ₹12.75 lakh minus the ₹75,000 standard deduction leaves a taxable income of ₹12 lakh, which is then fully covered by the rebate.

New Tax Regime Slabs: FY 2025-26 (AY 2026-27)

Why the Old Regime is Fading

Under the old regime, taxpayers have to “earn” their tax breaks by locking money into 80C investments, health insurance (80D), and home loans.

• The Break-Even Point: Experts suggest the old regime now only makes sense if your total deductions exceed ₹8.5 lakh.

• Declining Adoption: Official data suggests that less than 20% of taxpayers now opt for the old regime, as the simplicity and lower rates of the new regime outweigh the benefits of complex tax planning.

• The Strategy: The government isn’t formally scrapping the old regime yet; instead, it is making the new regime so attractive that the old one becomes “redundant by choice.”

Looking Ahead to Budget 2026

As we approach the 2026-27 Budget, industry experts expect the government to double down on this shift. There is speculation about further simplifying the Direct Tax Code and potentially raising the entry point for the highest 30% tax bracket to incomes above ₹50 lakh under the new regime to encourage high-earners to switch.

Conclusion

The shift from “invest to save” to “lower tax by default” is nearly complete. For the vast majority of middle-income earners, the new tax regime is now the clear financial winner.

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Disclaimer: Tax laws are subject to change. This summary is based on the Finance Act 2025. Always consult a certified tax professional before making major investment or filing decisions…

The post Is the Old Tax Regime Ending? New ₹12.75 Lakh Limit Shifts the Balance (2025-26) first appeared on Rightsofemployees.com.