Tips to Maximize Your Tax Savings under New Tax Regime

Maximize your tax savings under the new regime with tips for FY 2024-25. Claim exemptions on transport, job creation, conveyance, gifts, travel, NPS, and more.

Deductions under New Tax Regime

PRATEEK MAURYA | Jun 7, 2024 |

Tips to Maximize Your Tax Savings under New Tax Regime

Tips to Maximize Your Tax Savings under New Tax Regime

The Indian tax system has changed as the economy has grown. It includes direct taxes, like income tax, and indirect taxes, like GST. For the upcoming financial year 2024-25, the government decided to keep the same income tax slabs. So, taxpayers still have the choice between the old and new tax rules when they file their taxes.

Many people are worried about saving money on taxes under this new system. Some tips to help taxpayers save money on taxes for the year 2024-2025. These tips can help people understand the new rules and use deductions and exemptions to lower their tax bill.

Here are some Tips to maximize Your Tax Savings under New Tax Regime:

Specially Abled Taxpayers: Transportations are allowed with some limitations to ensure you meet your mobility requirements.

Job Creation Deduction: Hiring new eligible employees provides employers with an opportunity to deduct up to 190 percent of additional employee costs under section 80JJAA, mainly with the intention of creating new jobs.

Conveyance Allowance: Under Section 10(14)(ii), you can claim an exemption of up to Rs 1,600 per month or Rs 19,200 per annum for commuting or for the expenditure of commuting.

Gifts/Cash: Currently, provision of upto Rs. 50,000 received in form of gifts or in cash can be claimed as tax exemption in the particular financial year in question in order to relieve individuals from payment of taxes on such receipts.

Travel Reimbursements: Local transportations and other expenses spent on official tours or transportation are considered as tax exemption in a bid to reduce the tax liability aspect to work related trips in particular.

NPS Contributions: Employer contributions to an employee’s Tier-I NPS account are eligible for deductions under the Section 80CCD(2), subject to a limit upto 10% of salary in case of new generation companies and up to 14% of salary in case of Govt. NEW GEN. The deductions encourage persons to save for their retirement.

Daily Allowance: Ordinary and necessary daily expenses that are paid by employees on tour or transfer are recognized by the tax system hence giving relief in tax on such presents:

Home Loan Interest: It means that each individual can pay interest of up to Rs. 2 lakhs on a home loan and claim the deduction whether the house is being occupied by the individual or his/her family or is unoccupied. These taxes also discourage use of rental houses and prefer homeownership since the entire interest amount is deductible when the property is rented out.

Perquisites Tax: Actually, perquisites are additions to their normal wages or for example, an employer giving their employee gifts. Some of these perks are taxed at a flat rate of around 30% related to the total value of the particular benefit given.

Voluntary Retirement Scheme (VRS): While claiming tax exemptions the Government provides free hand to the employees who got voluntary retirement and they can get an exemption of up to Rs. 5 lakhs under Section 10(10C). This exemption assists in mitigating the costs during the transitional period so that they can be employed without much hitches.

Gratuity: Long-term service is valued also as employees having worked for a long term can apply for exemption of up to Rs. 20 lakhs under Section 10(10). These are some ways to acknowledge their commitment to a career in art and give them some financial support.

Leave Encashment: This means that private employees can have leave encashment of up to Rs. 3 lakhs under certain conditions such as where an employee has accumulated his/her leaves at the time of retirement or quitting the job, the employer employer can pay the employee a lump sum amount in lieu of his leave period. While civil servants are allowed to claim the full fares, as Nerisa illustrated during the interviews. This is a relief fund exemption, most probably aimed at helping employees who tend to accrue significant leave credit balances.

Standard Deduction: From the next financial year for New Tax Regime, tax payers opting for it will be allowed a standard deduction of up to Rs. 50,000. This is a way of deducting certain amounts from the gross income in an effort to minimize the taxable income and reap some benefits in the process.

Family Pension: An example is that those who die while still being employed have their dependents in a position to be paid family pension. This income is allowable for deductions under Section 57(IIA) thereby enabling the surviving family members receive some level of Compensation.

Agniveer Corpus Fund: Moreover there is a new addition under 80CCH(2) where contributions made for philanthropic purpose will also be allowed deduction. This deduction is intended to make people donate to the Agniveer Corpus Fund which goes to various charities.

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