Taxpayers in India must file ITR by July 31, 2026, or be switched to the new default tax regime. The old regime remains attractive for many due to a wider range of deductions, despite the new regime's higher basic exemption and lower tax rates. Archit Gupta of ClearTax advises careful evaluation of eligible deductions under the old regime to optimize tax savings.
Salaried individuals can still reduce their tax liability under the new tax regime for FY 2025-26. Key deductions include employer contributions to NPS and EPF, a standard deduction of Rs 75,000, and interest on home loans for let-out properties. Exempt perquisites and certain official allowances also offer tax benefits.
Individuals without business income can switch between old and new tax regimes yearly, offering flexibility. Those with business income face stricter rules, with the decision being binding for subsequent years, allowing only one withdrawal. The choice depends on financial situations and tax benefits.
A new tax regime for Tax Year 2026-2027 will impose a maximum 39% income tax rate on certain individuals and entities to prevent tax avoidance. Surcharges are capped at 25%, but exceptions may lead to higher rates in specific AOP or BOI scenarios.
Under India's New Tax Regime, salaried employees and pensioners can claim a ₹75,000 standard deduction, employer NPS contributions (up to 14% of salary), and interest deductions on home loans for let-out properties, reducing taxable income.
The new tax regime in India allows for tax-free benefits on items like meal coupons and gadget reimbursements, potentially reducing tax liability to zero on a Rs 15 lakh CTC
