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In the budget 2025 towards the central government, the income of up to 12 lakhs of those who adopted the new tax regime was tax free. Also, if you add deduction amount, then it becomes 12 lakh 75 thousand rupees. If you adopt New Tax Resetam in this financial year, then we tell you about 4 ways, from which you can save your tax.
Invest in NPS
The NPS is mainly designed for retirement, but it is also a great way of tax savings. Through the company, up to 14% of your basic salary in NPS is tax-free, which comes under section 80ccD (2). Despite this, many employees do not make full use of this benefit. If you invest in retirement and future children already through monthly SIP. However, these investments will be taxed at the time of redemption. If they put part of the SIP for their retirement in the NPS, then not only will their tax be reduced, but 60% of the NPS corpus extracted at the time of retirement will be tax-free. At the same time, equity (NPS-e) option in NPS gives good returns and helps in making property in a long time along with tax savings. However, the money used to buy annuity on retirement is not tax-free.
Contribute more to EPF
The company’s contribution to both Employees Provident Fund (EPF) and NPS is part of your CTC. However, many employees contribute only to the EPF, which is 12% i.e. Rs 1,800 per month on the range of Rs 15,000. If you want, you can put up to 12% of your real 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 system. This may reduce your tech-home salary (home pay), but your savings for retirement will increase.
Investment in the name of parents
However, this is not a full fruit strategy. In the ET report, experts say that it should be adopted carefully. If your parents have no income, then you can save tax by investing in their name. Gift money to your non-earning parents. Mother invests this money in fixed deposits (FD). The interest received from FD will be their income. If their total income is less than tax-free limit (Rs 3 lakh, in the new regime), then no tax will be levied on this interest. If the mother wants to give you back this interest, then it will also have to be shown as a gift, so that there is no tax liability.
Professional taxation for professionals
If you are not a salary employee, you cannot take benefits like NPS or EPF. However, you can take advantage of the Principal Taxation Scheme under Section 44ADA.
What is Principal Taxation?
In this scheme, you can show only 50% of your total income as taxable income, no matter how much your real expenses are. This reduces your tax liability, because you do not need to keep an account of real expenses.
Disclaimer- This news has been given only according to general information. For any tax suggestions and advice, talk to the expert.