Standard Deduction is a fixed amount that can be subtracted from the taxpayers’ total income to bring down the amount of income subject to taxation.
ITR Filing: The Government has been making several announcements to make the new tax regime more attractive. However, officials have also clarified that the old tag regime will not be discontinued. There is a perception that the new tag regime is simpler and has lower rates. The new tax structure under the new tax regime announced in the Union Budget 2025-26 is expected to benefit around 5.65 crore taxpayers who fall under the income slab of Rs 4 lakh and above.
But this doesn’t mean that one should stop tax planning as it can help taxpayers maximise savings.
Here, we are going to talk about three deductions that can help taxpayers maximise their savings under the new tax regime.
Standard Deduction
This is a fixed amount that can be subtracted from the taxpayers’ total income to bring down the amount of income subject to taxation. Salaried individuals are allowed to claim a standard deduction of Rs 75,000. Earlier, this amount was Rs 50,000, and Union Finance Minister Nirmala Sitharaman increased the amount to Rs 75,000 in the Union Budget 2024 in July
National Pension Scheme or NPS
The National Pension Scheme or NPS is a scheme sponsored by the government. This scheme lets individuals invest a fixed amount every month and get financial assistance after retirement. The contribution in this scheme falls under Section 80CCD and allows employees to deduct up to 14 per cent of their basic salary invested in the National Pension Scheme. This contribution is still eligible for deduction.
Employee’s Provident Fund (EPF)
The Employee’s Provident Fund (EPF), which is backed by the government, is a retirement savings scheme that lets the salaried class save for retirement. The scheme is managed by the government body Employees’ Provident Fund Organisation (EPFO) and works under the Ministry of Labour.
