income tax
Published on 21 July 2025
Understanding Income Tax Notices: High-Value Transactions Explained
Here’s the revised version:
How to Actually Maximize Tax Savings Under the New Regime (FY 2025–26) Understanding What Works—and What Doesn’t
Over the past few years, the new income tax regime has steadily become more attractive, especially after the 2025 Union Budget bumped up the Section 87A rebate. Still, many salaried individuals are confused about what’s genuinely allowed and what’s no longer relevant.
What’s New (and Useful) in the Latest Tax Regime
The new regime promises simplicity—flat slabs, fewer exemptions, and quicker filing. But don’t confuse simplicity with generosity.
Key features include:
- Section 87A rebate: If your taxable income (after deductions) is up to ₹12 lakh, you get a full tax rebate of ₹60,000. That’s a zero-tax bill.
- Standard deduction: Salaried folks and pensioners get ₹75,000 flat—no paperwork needed.
- Latest tax slabs:
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 4,00,000 | 0% |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
What You Can Still Claim—Despite Fewer Deductions
Many common deductions like 80C or HRA are gone under the new regime. But a few key savings tools remain valid:
- Standard deduction: ₹75,000 for all salaried and pensioners.
- Employer's NPS contribution (Sec 80CCD(2)): Up to 10% of salary (14% if you’re a government employee) is deductible.
- Family pension: You can claim up to ₹25,000 or one-third of the pension amount, whichever is lower.
- Post office interest: Savings account interest up to ₹3,500 per year is exempt.
- Interest on let-out property: You can deduct home loan interest—but only if the property is rented, not self-occupied.
- Agniveer Corpus contributions (employer/central govt. share): Deductible under Section 80CCH.
A Realistic Example: Can You Pay Zero Tax on ₹19 Lakh Salary?
Let’s say you earn ₹19 lakh annually. Can you use deductions to avoid paying tax? Not really—here’s why.
| Particulars | Amount (₹) |
|---|---|
| Gross Salary | 19,00,000 |
| Less: Standard Deduction | 75,000 |
| Less: Employer NPS (assume 10%) | 1,26,000 |
| Less: PO Interest | 3,500 |
| Net Taxable Income | 17,95,500 |
Tax calculation:
- 0% on first ₹4,00,000 → ₹0
- 5% on next ₹4,00,000 → ₹20,000
- 10% on next ₹4,00,000 → ₹40,000
- 15% on next ₹4,00,000 → ₹60,000
- 20% on remaining ₹3,95,500 → ₹79,100
Total Tax: ₹1,99,100 Plus 4% Cess: ₹7,964 Final Tax Payable: ₹2,07,064
So unless your employer is unusually generous with NPS contributions or you qualify for rare exemptions (like disability or armed forces allowances), zero tax on a ₹19 lakh salary under this regime is just not possible.
Common Myths—Busted
- HRA/Travel/80C Deductions: Not available under the new regime, unless you fall in a special category (e.g., disabled, government allowances).
- PPF & Sukanya contributions: Maturity amounts are tax-free, but investing in them gives no benefit under this regime.
- Employer PF vs NPS: Only the employer’s NPS contributions count for deductions under Section 80CCD(2).
What’s Allowed vs What’s Out
| Allowed | Not Allowed |
|---|---|
| ₹75,000 standard deduction | Section 80C (PPF, LIC, ELSS) |
| Employer’s NPS contribution | HRA, LTA, conveyance |
| Interest on let-out property loans | Section 80D/80E/80G |
| Post office savings interest | 80TTA, 80GG |
| Family pension (up to ₹25,000) | Interest deduction for self-occupied homes |
Exceptions exist, but mostly in government or special disability categories.
How to Make the Most of It
Here’s a practical checklist:
- Claim the full ₹75,000 standard deduction—no forms needed.
- Ensure your company contributes to NPS, and get the deduction confirmed on your Form 16.
- Use a reputable online calculator—don’t rely on WhatsApp forwards or TikTok tax gurus.
- If you have a second house that’s rented, claim the interest on the home loan.
- Check for minor exemptions like family pension or post office interest.
Who Can Reach Zero Tax?
Only those whose net taxable income (after deductions) stays below ₹12 lakh qualify for the Section 87A rebate.
That’s ₹12.75 lakh if you include the standard deduction for salaried employees.
For everyone else—especially private-sector folks earning more than ₹13–14 lakh—there’s no clean way to drop to zero tax under the new regime. Ignore anyone promising otherwise.
Final Word: Plan Smart, Ignore the Noise
The new tax regime does offer a cleaner, lower-maintenance path for many individuals. But the scope for aggressive “zero tax hacks” is very narrow—and mostly out of reach for the average salaried employee earning over ₹15 lakh.
Your best approach?
- Know your real deductions.
- Avoid misinformation.
- Run the numbers carefully—and revisit annually.
For those with stable salaried income, focus less on trying to eliminate tax entirely, and more on using what’s genuinely allowed under law.