TaxSavvy

TaxSavvy for salaried, ₹12.75 L to ₹25 L

At your salary, old or new regime can change your tax by thousands.

₹12.75 L to ₹25 L a year

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  • Complete salaried tax plan
  • Employee claims to employer, Form 124 (earlier Form 12BB)
  • Income tax return for salaried and pensioners, ITR-1 (Sahaj)

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  • Form 16
  • Salary slip
  • AIS or 26AS
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Facts, Provisions and law, Analysis, Conclusion.

  • Old vs New Tax Regime: Which Is Better For You?
    Facts
    The most important annual tax decision for every salaried employee. New regime: lower rates, no deductions. Old regime: higher rates, many deductions. The winner depends entirely on HOW MUCH you invest and claim. Rule of thumb: if deductions > ₹3,75,000 per year → old regime is better. Below that → new regime wins. Calculate, don't guess.
    Provisions and law
    Sec 202 (old 115BAC); Finance Act 2023; Finance Act 2024; Old Regime Slabs; Salaried switching
    Analysis
    Break-even deduction analysis, the key table: Income ₹10L. Old regime: taxable = ₹10L − ₹75K std − ₹1.5L Sec 123, Income-tax Act 2025 (old Sec 80C) − ₹25K Sec 126 (old Sec 80D) − ₹2L Sec 22(1)(b) (old Sec 24(b)) = ₹5.5L. Tax = 20% × (₹5.5L − ₹5L) + 12,500 = ₹22,500. New regime: taxable = ₹10L − ₹75K std = ₹9.25L. Tax = 5% × ₹4L (₹3-7L) + 10% × ₹2.25L (₹7-9.25L) = ₹20,000 + ₹22,500 = ₹42,500. OLD REGIME WINS if you have home loan + Sec 123 (old Sec 80C) investments. When new regime wins clearly: (1) No home loan. (2) No Sec 123 (old Sec 80C) investments beyond EPF (which is forced, not a choice). (3) No HRA (own accommodation). (4) Young employee, just started working, no investments yet. (5) Income below ₹7L, new regime Sec 156 (old Sec 87A) rebate makes tax zero. (6) Very high income (₹30L+) where deductions (capped at ₹3.75L) have limited impact on marginal tax.
    Conclusion
    • List all deductions you actually use: Sec 123 (old Sec 80C; EPF + investments), Sec 126 (old Sec 80D; health insurance), Sec 22(1)(b) (old Sec 24(b); home loan interest), HRA
    • Add standard deduction ₹75K to both regime computations
    • Compute actual old regime tax: salary − ₹75K std − Sec 123 (old Sec 80C) − Sec 126 (old Sec 80D) − HRA − Sec 22(1)(b) (old Sec 24(b))
    • Compute new regime tax: salary − ₹75K std − Sec 124 (old Sec 80CCD(2); if activated) → apply new slabs
    Read the full answer
  • Section 124 (old 80CCD(2)): Employer NPS Contribution (Both Regimes)
    Facts
    The only deduction available in BOTH old and new tax regime. Employer contributes to your NPS on your behalf. You pay zero, and get a ₹45,000 to ₹1.05L annual deduction. The most underused tax saving move for salaried professionals.
    Provisions and law
    Sec 124 (old 80CCD(2)); Finance Act 2024; Sec 202 (old 115BAC); Sec 80CCD(1B); PFRDA Regulations
    Analysis
    How Sec 124, Income-tax Act 2025 (old Sec 80CCD(2)) works in practice: Your basic salary is ₹50,000/month. Employer contributes 14% of ₹50K = ₹7,000/month to your NPS. That ₹7,000 is NOT counted as your income. Annual NPS contribution by employer = ₹84,000. Deduction under Sec 124 (old Sec 80CCD(2)) = ₹84,000. Your in-hand salary is unchanged. But your taxable income falls by ₹84,000. Two-step benefit: Step 1, Lower taxable income now (immediate tax saving). Step 2, NPS corpus grows tax-free. At retirement: 60% lump sum withdrawal tax-free. 40% in annuity (taxable as salary in retirement, but typically at lower rate). New regime taxpayers especially benefit: In new regime, Sec 123, 126 (old Sec 80C, 80D), home loan interest are all gone. But Sec 124 (old Sec 80CCD(2)) REMAINS. For a new regime taxpayer at 30% bracket with basic salary ₹50K/month: ₹84,000 × 30% = ₹25,200 saved annually. Zero investment required from them.
    Conclusion
    • Check if NPS account (PRAN) exists, if not, open via eNPS portal (enps.nsdl.com)
    • Inform employer HR to activate NPS employer contribution (Form KYC to employer)
    • Request CTC restructuring, move portion of special allowance to NPS employer contribution
    • Confirm the contribution percentage: private sector max 14% of (basic + DA)
    Read the full answer
  • Section 123 (old 80C): ₹1.5L Deduction (All Instruments)
    Facts
    The most widely claimed deduction in India. One limit of ₹1.5L covers 15+ instruments. Most people fill it with the wrong instruments, choosing low-return products over high-return ones. This is a ₹30,000 to 46,800 annual tax saving decision.
    Provisions and law
    Sec 123 (old 80C); Sec 123 (old 80CCC); Sec 124 (old 80CCD(1)); Sec 80CCD(1B); CBDT Notification
    Analysis
    All instruments under Sec 123, Income-tax Act 2025 (old Sec 80C) and their returns: ELSS mutual funds (market-linked, ~12-14% historical, 3-yr lock-in, best for wealth building) | PPF (7.1% tax-free, 15-yr lock-in, safest) | NPS (Sec 124 (old Sec 80CCD(1)), market-linked, 60% corpus available at retirement) | EPF (employer contribution) | Life insurance premium (term = efficient, endowment = inefficient) | ULIP (combines insurance + investment, high charges) | 5-year tax-saving FD (6-7%, taxable interest) | NSC (7.7%, taxable interest) | Home loan principal repayment (no separate investment needed) | Sukanya Samriddhi Yojana (girl child, 8.2%, EEE) | Senior Citizen Savings Scheme (8.2%, taxable interest) | Children's tuition fees (school fees, not coaching) | Stamp duty on property purchase (one-time, in purchase year). Most efficient Sec 123 (old Sec 80C) instrument: ELSS fund (Equity Linked Savings Scheme). Lock-in: 3 years.
    Conclusion
    • Confirm old regime is selected (Sec 123 (old Sec 80C) not available in new regime)
    • Calculate how much of ₹1.5L is already filled: EPF contribution (from payslip) + any existing LIC premium
    • Remaining ₹1.5L gap, fill with most efficient instrument (ELSS for wealth builders, PPF for safety seekers)
    • ELSS: Start SIP by April to spread across 12 months. Or lump sum before March 31.
    Read the full answer
  • Old vs New Tax Regime: Selection
    Facts
    The single biggest tax decision every year. Wrong selection costs ₹20,000-80,000 annually for most salaried individuals.
    Provisions and law
    Sec 202 (old 115BAC); CBDT Circular 4/2023; Form 10-IEA; Sec 156 (old 87A)
    Analysis
    New regime rates (AY 2025-26): ₹0-4L: NIL | ₹4-8L: 5% | ₹8-12L: 10% | ₹12-16L: 15% | ₹16-20L: 20% | ₹20-24L: 25% | Above ₹24L: 30%. New regime, what's allowed: Standard deduction ₹75,000 (salaried), employer NPS Sec 124, Income-tax Act 2025 (old Sec 80CCD(2); 14% basic), gratuity exemption, EPF, HRA (not deduction but exemption), Section 157 (old Sec 89) arrears. Old regime, additional deductions: Sec 123 (old Sec 80C; ₹1.5L), Sec 126 (old Sec 80D; ₹25-50K), 80CCD(1B) NPS (₹50K), home loan interest Sec 22(1)(b) (old Sec 24(b); ₹2L), HRA, LTA, all 80-series deductions. When old regime wins: Home loan (claiming ₹2L+ interest), NPS 80CCD(1B) ₹50K, total Sec 123 (old Sec 80C) investments above ₹1.5L, HRA in metro cities, Sec 80D (now Sec 126) for family health insurance. Default from AY 2024-25: New regime is default. Must DECLARE to employer (Form 12BB, now Form 124) if you want old regime TDS. Can still switch at ITR filing time. Sec 202 (old Sec 115BAC): New tax regime, reduced rates, most deductions not available. Optional for individuals and HUFs.
    Conclusion
    • List all deductions you actually claim (not just theoretically possible)
    • Compute tax under old regime: Total income − all deductions → apply old slabs
    • Compute tax under new regime: Total income − ₹75K standard deduction → apply new slabs
    • Compare FINAL tax payable (after Sec 156 (old Sec 87A) rebate, cess) under both
    Read the full answer

At your salary, old or new regime can change your tax by thousands.

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