12 Proven Tax Saving Tips for Salaried Employees Under the New Tax Regime

The new tax regime, which became the default from FY 2024-25, offers lower tax rates but removes most deductions and exemptions. While HRA, LTA, standard deduction (₹75,000 in the new regime from FY 2024-25), and professional tax rebate remain available, deductions under Chapter VI-A (Section 80C, 80D, 80G, etc.) are not allowed. Before choosing a regime, compare your total tax liability under both regimes using your actual income and investment figures — not assumptions.

If you decide the old tax regime works better for you (which it often does for those with significant 80C investments, HRA, or home loan interest), make the most of the ₹1.5 lakh Section 80C limit. The most efficient 80C investments are ELSS mutual funds (3-year lock-in, potentially highest returns), PPF (15-year lock-in, tax-free returns), and NPS (additional ₹50,000 deduction under 80CCD(1B) — available in both regimes). EPF contributions from your salary automatically qualify.

National Pension System (NPS) deserves special attention because it is one of the few deductions allowed even under the new tax regime — specifically the employer's contribution to NPS under Section 80CCD(2) up to 14% of salary (10% for central government employees). If your employer offers NPS, enrolling and channelling part of your CTC through this route is highly tax-efficient under either regime. Withdrawals at retirement are 60% tax-free (40% must be used to purchase annuity).

Additional tips: Claim House Rent Allowance (HRA) properly by ensuring rent receipts and the landlord's PAN are available for rent above ₹1 lakh per year. Section 80D allows ₹25,000 for self and family health insurance, plus ₹25,000 for parents (₹50,000 if parents are senior citizens). For those with home loans, interest up to ₹2 lakh per year is deductible under Section 24(b) in the old regime. Keep all investment and premium payment receipts and submit Form 12BB to your employer by April to minimise TDS throughout the year.