Synopsis: According to the New Tax Regime, there are not many options to save taxes as most of the deductions and exemptions are reduced. This article highlights 8 smart strategies to save taxes even under the new tax regime.
You can save tax in the new tax regime by using limited but effective benefits such as the employer’s contribution to NPS, interest on home loan for a rented property and more. Let’s look into the various smart ways to consider to save tax under the New Tax Regime:
1. National Pension Scheme (NPS)
NPS still remains as one of the most effective tax saving tool under the new regime, but is not utilized to its fullest. Under section 80CCD(2), when the employer contributes to your NPS account, the amount is fully deductible up to 14% of your basic salary plus DA for central government employees. Whereas, only 10% for private sector employees. This is an employer-side benefit, for example; Any salaried professional earning a salary of INR 1 lakh per month, an employer contribution of NPS of INR 14000 per month turns into a deduction of INR 1.68 lakh annually.
2. Tax Gain Harvesting
If you have investments in equity or mutual funds, you just sell the investment when you think it’ll have the least impact on your taxes. If you’d like to keep the investment, you can book the profits and buy it again. Doing so effectively resets the cost basis on which your future tax liability will be calculated. This opportunity isn’t available when you’re harvesting losses.
3. Move Money from Bank Deposits to Mutual Funds
Moving money from bank deposits (like FDs) to mutual funds can reduce taxes because bank interest is fully taxable at your slab rate, while mutual funds offer capital gains tax benefits, such as a ₹1.25 lakh annual exemption on long-term equity gains (held >1 year) and no tax until redemption. You can move it to arbitrage funds if you are not going to use it for few months or to equity savings funds if you are not going to use it for a year or two.
Also read: Top 10 Income Sources That Are Completely Tax-Free in India (2026)
4. Home-loan on a let-out Property
The new tax regime offers tax deductions on interest paid on a home loan for a rented property, this deduction is not available for self-occupied property. The rental income from those properties are taxable, but it can be off-set with the interest of your EMI against rental income under “Income from House Property”. This can bring down your net taxable income from that property to zero or even lower.
5. Sovereign Gold Bonds (SGBs)
The SGBs offer an annual interest of 2.5% (taxable) but the benefit lies on the maturity, where capital gains on redemption at the end of the 8-year tenure is completely exempt from tax. There is no long-term capital gains tax and is tax-free appreciation tied to gold prices. NOTE: SGBs purchased from the secondary market attract 12.5% long-term capital gains tax without indexation, even if held till maturity.
6. Gifting
Gifts received from relatives are fully exempt from tax under the Income tax act, regardless of the amount. The same applies on the occasion of marriage irrespective of whether they come from relatives or friends. Gifts received from non-relatives are also exempt but only up to INR 50000 in a financial year. The entire amount is taxable after this threshold.
7. Family Pension
Any family member receiving pension after the death of an individual who served as a government or private sector employee would receive a portion of pension that is exempt from tax. One-third of the family pension received or INR 25000 per annum; whichever is lower is exempt under section 57(iia). This is a relief to the pensioner families who have no other source of income or limited income.
8. Sukanya Samriddhi Yojana (SSY)
This scheme is considered for girls below the age of 10, the SSY scheme offers a government-backed interest rate and carries an Exempt-Exempt-Exempt (EEE) tax status. Minimum investment of INR 250 to Maximum up to INR 1.5 Lakh per year, per account which matures when the girl turns 21. There is no tax liability at any stage making it an exceptional long-term wealth building instrument for the girl.
In conclusion, saving tax in the new regime ranges from deductions to exemptions to employee structuring. Together all the strategies mentioned above can reduce your tax rate while also building you a long-term financial wealth. Thus, the new regime is an opportunity to simplify taxes and invest smarter.
Written by Vijai Krishna
