Save More, Spend Smarter: Insights from the New Tax Regime

April is the perfect time for you to plan your taxes for FY26 (April 1, 2025 – March 31, 2026). Tax planning is majorly about legally reducing your tax liability. This one can do by using deductions, exemptions, and investment tools that are offered under the Income Tax Act. Here, we'll be discussing a few pointers that will better help you manage your finances – save more, spend smarter.

The New Tax Regime

In the recently shared Union Budget 2025, Finance Minister Nirmala Sitharaman announced changes to the new budget tax slabs as per the new regime. The revised slabs are kicked in from April 1, 2025. They are now shaping the tax structure for the financial year 2025-26 in the country.

Features of New Tax Regime Slabs 2025-26

The new tax regime slabs for FY 2025-26 (AY 2026-27) has some big updates. They're worth paying attention to. One may know that the new regime is the default, however, in case you do not have business income, you can still stick to the old one whenever it works better for you.

The key features of the New Tax Regime slabs for 2025-26 are as follows:

Higher Basic Exemption Limit

Starting April 1, 2025 (FY 2025-26), the basic exemption limit for all individual taxpayers went up to Rs 4 lakhs. This is to give taxpayers an additional Rs 1 lakh of tax-free income.

Higher Tax Rebate Under Section 87A

Earlier, the tax rebate under Section 87A ensured individuals with a taxable income of up to Rs 7 lakhs did not have to pay any tax. But from April 1, 2025, this benefit extended to those earning up to Rs 12 lakhs. Hence, they will pay no tax on income up to that amount.

Surcharge

Lastly, for those earning more than Rs 2 crore, the highest surcharge rate is 25%. It stays exactly the same for Budget 2025.

The tax slabs as per the new regime have been updated under the latest Finance Act 2025 for the financial year 2025-26. Here's the revised tax structure - the new income tax slabs:

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Key Tax Deadlines for FY26

• 31 July 2025: File ITR (Income Tax Return) for FY26 without penalty
• 15 March 2026: Deadline for most tax-saving investments
• 31 March 2026: End of the financial year FY26

Smart Ways to Save Tax Under the New Regime

Tips to save income tax:

Start Tax Planning Early in April - Avoid Rushed Investments in March 2026

Many choose to wait until the last moment in March to invest just for the purpose of saving income tax. This often results in poor choices. Begin in April itself to space out your investments monthly and pick what suits you best.

Choose Investments Matching Your Financial Goals

Don't just invest to save tax, in fact, invest with a goal in mind. Use it to achieve something in the future. This can be buying a house, funding the education of your child, or retiring comfortably.

Learn from Mistakes

Give time to ponder over what didn't work well for you in the previous year. See if you invested in something just to save tax, but didn't understand it. Also try to notice if you missed any deductions.

Consider Professional Help

If tax planning seems doubtful, seek help from a Chartered Accountant (CA) or a certified financial planner. S/he can help you find better ways to save tax. They also support you to plan out your investments based on your individual income and goals.

Don't Avoid Filing Your ITR

Even if your income is below the taxable limit, file your Income Tax Return (ITR) as it is still important. It is a proof of income and serves when applying for visas, loans, or even scholarships.

Example Comparison: Old Vs New Tax Regime (2025-26 Vs 2024-25)

High-Income Earners: Above Rs 24 Lakh

Suppose you earn Rs 35 lakhs a year (Rs 35,00,000). Then, your deductions and exemptions will depend on factors like HRA, Section 80D, LTA, Section 80C, and home loan interest.

When talking of standard deduction, the old regime allows Rs 50,000. Conversely, the new regime offers Rs 75,000.

This shows that with a shift in the total deductions and exemptions between Rs 5.75 lakhs and Rs 9.5 lakhs, the final tax bill undergoes adjustments. As the deductions cross Rs 8 lakhs, the old regime often starts making more financial sense. This will help you make greater tax savings.

Old Tax Regime: With HRA, LTA, 80C, and home loan interest factored in, the taxable income could drop significantly, making a noticeable difference in the final tax calculation.

New Tax Regime: The standard deduction is higher at Rs 75,000, but the trade-off is that most other deductions and exemptions are either reduced or completely unavailable.

Similarly, cases of mid-income earners with gross salaries of Rs 14 lakhs, Rs 18 lakhs, and Rs 22 lakhs can be discussed.

The exact benefit or loss under the old regime shifts with a particular scenario. It depends on how deductions stack up. Personal deductions have a big role to play in shaping the final outcome.

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