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In Budget 2025, the central government made income up to Rs 12 lakh tax-free for those who adopt the new tax regime. Also, if the amount of deduction is added, it becomes Rs 12 lakh 75 thousand. If you adopt the new tax regime in this financial year, then we will tell you about 4 ways through which you can save more tax.

Invest in NPS

NPS is primarily designed for retirement, but it is also a great way of tax saving. Contribution of up to 14% of your basic salary in NPS through the company is tax-free, which comes under section 80CCD (2). Despite this, many employees do not make full use of this benefit. If you already invest through a monthly SIP for retirement and your child's education.

But these investments will be fully taxed at the time of redemption. If they invest part of their retirement SIP in NPS, not only will their tax be reduced, but 60% of the NPS corpus withdrawn at the time of retirement will be tax-free. At the same time, the equity (NPS-E) option in NPS gives good returns and helps in tax savings as well as building wealth in the long run. However, the money used to buy an annuity on retirement is not tax-free.

Contribute more to EPF.
The company's contribution to both the Employees' Provident Fund (EPF) and NPS is a part of your CTC. But, many employees make only the minimum contribution to EPF, which is 12% i.e., Rs 1,800 per month on a limit of Rs 15,000. If you want, you can put up to 12% of your actual basic salary in EPF. For this, ask your employer to change the salary structure in such a way that your EPF contribution increases. The company's contribution is tax-free, even if you are in the new tax regime. This may reduce your take-home salary a little, but your savings for retirement will increase.

Investing in the name of parents
However, this is not a foolproof strategy. In an ET report, experts say that it should be adopted carefully. If your parents do not have any income, then you can save tax by investing in their name. You gift money to your non-earning parents. Mother invests this money in a fixed deposit (FD). The interest received from FD will be her income. If her total income is less than the tax-free limit (Rs 3 lakh, in the new regime), then there will be no tax on this interest. If the mother wants to give this interest back to you, then it will also have to be shown as a gift, so that there is no tax liability.

Presumptive taxation for professionals
If you are not a salaried employee, then you cannot avail of benefits like NPS or EPF. However, you can avail of the presumptive taxation scheme under section 44ADA.

What is presumptive taxation?

Under this scheme, you can show only 50% of your total income as taxable income, irrespective of your actual expenses. This reduces your tax liability as you do not need to keep track of your actual expenses.

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