The new tax regime introduced by the government of india allows taxpayers to choose between old and new tax structures. While the new regime offers lower tax rates, it limits exemptions and deductions. However, there are still key benefits that can help reduce your tax liability.
Here are the five major advantages of the new tax regime:
1. Lower Tax Slabs
- The new regime features reduced tax rates across various income slabs.
- For example:
Income (₹)
Old Regime Rate
New Regime Rate
0–2.5 lakh
Nil
Nil
2.5–5 lakh
5%
5%
5–7.5 lakh
20%
10%
7.5–10 lakh
20%
15%
10–12.5 lakh
30%
20%
12.5–15 lakh
30%
25%
Above 15 lakh
30%
30%
💡 Benefit: Taxpayers can save significant money in the middle-income brackets.
2. Standard Deduction Available
- Even under the new regime, a standard deduction of ₹50,000 is available for salaried individuals.
- This deduction reduces taxable income automatically without any complex documentation.
💡 Benefit: Simple, hassle-free reduction in taxable income.
3. NPS (National Pension Scheme) Contribution Benefits
- Contributions to NPS continue to get tax benefits under Section 80CCD(2).
- Employers’ contributions to NPS are deductible up to 10% of salary even under the new regime.
💡 Benefit: Helps in long-term retirement savings while reducing tax liability.
4. Tax-Free Allowances Remain for Certain Cases
- Some allowances like employer contribution to EPF, gratuity, and leave encashment remain tax-free.
- This allows taxpayers to continue enjoying benefits from salary components.
💡 Benefit: Encourages saving in provident funds and retirement benefits without extra tax burden.
5. No Complicated Documentation Needed
- The new tax regime has fewer exemptions and deductions, which simplifies income tax filing.
- Taxpayers don’t need to submit proofs for multiple exemptions like HRA, LTA, or home loan interest (except for NPS and standard deduction).
💡 Benefit: Simpler tax compliance and faster refunds.
🌟 Final Thoughts
The new tax regime may seem restrictive due to fewer deductions, but it offers real benefits like:
- Lower tax slabs
- Standard deduction
- NPS contributions
- Tax-free allowances
- Simplified compliance
For middle-income taxpayers, the new regime can be a great way to save on taxes while keeping filing simple.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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