The new tax system has been further advantageous thanks to announcements made in the 2025 budget. There is no income tax for those who earn £Rs 120,000 a year, taxpayers have another reason to choose a new regime over the old one.
This means that more and more taxpayers will choose new tax systems, especially those falling into the low-income class. The chairman of CBDT Ravi Agrawal even argued that 90% of taxpayers could switch from now 75% to the new tax system.
This includes older tax benefits, including deductions and exemptions offered by taxpayers to invest in tax savings measures such as PPF (Public Provident Fund), National Savings Seciper (NSC), and Sukanya Samridhi Yojana (SSY). It means losing. .
Tax benefits lost under the new tax system:
1. Section 80C Investments: Payments for ELSS, PPF, SPF, RPF, life insurance premiums, major totals for mortgages, Sukanya Samriddhi Yojana, National Savings Secipe, and Senior Citizens Savings Scheme.
2. Section 80D: Payments made for medical insurance premiums up to the maximum limit £25,000 £50,000 for the elderly.
3. Section 80ccc: Payments paid for pension fund premiums.
“If you choose a new tax system, you will not be eligible for exemptions/deductions available in income tax, except for standard deductions and NPS deductions (employer stocks), which are available in Sections 80C, 80D, Mortgages, This means that interest-based deductions such as HRAs are not permitted.
Investment and tax savings are separate
I believe that continuing to invest in tax payment instruments is still OK, as investments should ideally be seen in a different way than tax savings.
“We should not mix investments with taxes. We should invest in ways that provide tax-efficient returns, but we should avoid making decisions just to save taxes. PPF and SSY are still almost the same It offers a reasonable return with zero risk, but in such a scenario, it comes with a long lock-in. Investors check what asset classes are investable, and risk appeal and purpose You need to understand and invest in it,” Siddharth Alok said. AVP Investments, Epsilon Money.
Sridharan S, founder of Wealth Ladder Direct, says investors have more options when it comes to where they invest. “Retail investors should invest in tax savings only for the purpose of tax reductions, and then block money for three years (ELS) or 15 years (PPF). They now have their requirements “We can plan their future in a better way based on,” he says.
Financial Discipline
There is another perspective that investing in bond products is important not only in saving taxes, but also instilling in fian bone discipline.
“We are pleased to announce that Alekh Yadav, Head of Investment Products at Sanctum Wealth,” said: Their lock-in period encourages disciplined savings and allows for the benefits of compounding. Therefore, despite the lack of tax credits under the new regime, such measures remain a wise investment choice for many individuals. ”
