Author: Ankur Jhavery

Every year between January and March, salaried employees are asked by their employers to submit investment proofs for tax deductions. If you do not submit these proofs on time, your employer will deduct higher TDS from your salary for the remaining months. This guide explains what investment proofs you need, how to organize them, and the step-by-step submission process.

Why Do You Need to Submit Investment Proofs?

At the beginning of the financial year (April), you declare your planned investments and expenses in a tax declaration form. Your employer calculates TDS based on these planned deductions. However, between January and March, your employer asks for actual proofs to verify that you have indeed made those investments. If you cannot provide proofs, the employer will recalculate your tax and deduct higher TDS in the remaining salary months.

When to Submit Investment Proofs

Most employers set a deadline between mid-January and mid-February. However, the deadline varies by company. Some organizations allow submission until early March. Check with your HR or payroll department for the exact deadline. It is best to start collecting proofs from December itself to avoid last-minute stress.

Complete List of Investment Proofs Required

Section 80C Deductions (Up to Rs 1.5 Lakh)

• ELSS Mutual Funds — Consolidated Account Statement (CAS) from CAMS or KFintech, or mutual fund statements showing investments during the FY.
• PPF — PPF passbook copy or deposit receipts showing contributions during the FY.
• Life Insurance — Premium payment receipt from the insurance company for the current FY.
• NPS — Transaction statement from CRA (Central Recordkeeping Agency) showing contributions.
• Home Loan Principal — Provisional certificate from the bank showing principal and interest breakup.
• Children’s Tuition Fees — Fee receipts from the school or college. Only tuition fee component is eligible.
• Sukanya Samriddhi — Deposit receipts or passbook copy.
• Tax-Saving FD — Fixed deposit receipt showing 5-year lock-in period.

Section 80D (Health Insurance)

• Health insurance premium — Premium paid certificate or receipt from the insurance company.
• Preventive health check-up — Bills and payment receipts (up to Rs 5,000).

Section 80CCD(1B) (NPS Additional)

• NPS Tier-I contributions — Transaction statement showing additional contributions up to Rs 50,000 beyond 80C.

HRA Exemption

• Rent receipts — Monthly rent receipts with landlord details, signed by the landlord.
• Rent agreement — Copy of the rental agreement.
• Landlord’s PAN — Mandatory if annual rent exceeds Rs 1,00,000.

Section 24(b) (Home Loan Interest)

• Home loan interest certificate — Provisional certificate from the bank showing interest paid or payable during the FY.
• Possession letter — Proof that you have received possession of the property.

Other Deductions

• Education loan interest (Section 80E) — Interest certificate from the bank.
• Donations (Section 80G) — Donation receipts with organization’s PAN and 80G registration number.
• Leave Travel Allowance (LTA) — Travel tickets and boarding passes for domestic travel.

Step-by-Step Submission Process

Step 1: Gather All Proofs

Start collecting all receipts, certificates, and statements from December. Download digital copies from mutual fund platforms, insurance company portals, and bank websites.

Step 2: Organize by Section

Group your proofs by tax section — 80C, 80D, HRA, 24(b), etc. This makes it easier for your employer’s payroll team to verify and process.

Step 3: Fill the Employer’s Form

Your employer will provide a tax declaration or investment proof form. Fill it accurately with the amounts for each deduction. Ensure the amounts match your actual proofs.

Step 4: Submit Through the Designated Channel

Most companies use HRMS portals like Darwinbox, Keka, or GreytHR where you can upload scanned copies. Some companies still accept physical copies. Upload or submit within the deadline.

Step 5: Verify Your Payslip

After submission, check your February or March payslip to ensure the deductions have been applied and TDS has been recalculated correctly. If there are discrepancies, contact your payroll team immediately.

Tips for a Smooth Submission

• Do not wait until the last moment — start your tax-saving investments in April itself.
• Keep digital copies of all proofs throughout the year in a dedicated folder.
• Ensure all documents show the current financial year dates.
• If you missed the employer deadline, you can still claim deductions while filing your ITR and get a refund.

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After filing your Income Tax Return and e-verifying it, the next question on every taxpayer’s mind is — when will I get my refund? Checking your income tax refund status online is easy and takes just a few minutes. In this guide, we explain the different ways to track your refund and what each status means.

When Can You Expect Your Refund?

Once you e-verify your ITR, the return is sent to the Centralized Processing Centre (CPC) in Bengaluru for processing. Typically, the processing takes 15 to 45 days from the date of e-verification. After processing, if a refund is due, the CPC issues it to your pre-validated bank account. The entire cycle — from e-verification to refund credit — usually takes 20 to 60 days, though it can vary.

Method 1: Check Refund Status on the Income Tax Portal

Step 1: Log In to the Portal

Visit incometax.gov.in and log in using your PAN as user ID and your password. Complete the verification step if prompted.

Step 2: Navigate to Filed Returns

Go to e-File > Income Tax Returns > View Filed Returns. This page shows all your previously filed returns with their current status.

Step 3: Check the Status

Find the relevant assessment year and check the status. You may see one of the following statuses:

• Return Submitted and Pending Verification — You have filed but not yet e-verified. E-verify immediately.
• Successfully e-Verified — Your return has been verified and is awaiting processing.
• Return Processed — CPC has processed your return. Click on the assessment year to see the intimation under Section 143(1).
• Refund Issued — The refund has been issued to your bank account. It typically takes 3-5 business days to reflect after this status appears.
• Refund Failure — The refund transfer to your bank failed, usually due to incorrect bank details.

Step 4: View the Intimation Order

Once the return is processed, click on “View Order” to see the Section 143(1) intimation. This document shows your declared income, computed income, tax payable, and refund amount (if any). Compare this with your original filing to check for discrepancies.

Method 2: Check on the NSDL/TIN Website

Visit tin.tin.nsdl.com/oltas/refund-status-pan.html (or search for “NSDL refund status”). Enter your PAN number and select the assessment year. Enter the captcha and click Submit. The site will show whether a refund has been determined, the amount, the mode of payment (ECS or cheque), and the date of issue.

Method 3: Check via the Income Tax App

Download the official AIS (Annual Information Statement) app or the Income Tax India app from the Play Store or App Store. Log in with your credentials and navigate to the refund status section. This provides the same information as the website but is convenient for checking on the go.

Understanding Refund Statuses in Detail

• “No e-Filing Has Been Done” — The system does not find a return for the selected assessment year. Check if you selected the correct year.
• “Return Is Being Processed” — Your return is in the processing queue. Wait for it to be completed.
• “Refund Determined and Sent to Refund Banker” — The refund amount has been finalized and sent to the State Bank of India (refund banker). Credit to your account should happen in 3-7 working days.
• “Refund Paid” — The refund has been credited to your account. Check your bank statement.
• “Refund Returned/Unpaid” — The refund could not be delivered. Common reasons include wrong bank details, closed account, or name mismatch.
• “Demand Determined” — Instead of a refund, the CPC has computed an additional tax demand. Review the intimation carefully and respond if you disagree.

What to Do If Refund Fails

If your refund fails due to incorrect bank details, log in to the income tax portal, go to Service Request > Refund Reissue, update your bank details, and submit the request. Make sure your bank account is pre-validated before requesting a reissue. The reissued refund typically takes 15-20 days to credit.

Interest on Delayed Refunds

If the Income Tax Department takes more than the specified period to process your refund, you are entitled to simple interest at 6% per annum under Section 244A. This interest is calculated from the date of filing (for returns filed on time) or the date of payment of tax (for delayed returns).

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Health insurance is not just about protecting yourself against medical emergencies — it is also a powerful tax-saving tool. Section 80D of the Income Tax Act allows you to claim a deduction for health insurance premiums paid for yourself, your family, and your parents. For self-employed individuals who buy their own health insurance, understanding Section 80D can lead to significant tax savings. Here is everything you need to know.

What Is Section 80D?

Section 80D provides a tax deduction for premiums paid towards health insurance policies. This deduction is available over and above the Rs 1.5 lakh limit under Section 80C, making it an excellent additional tax-saving opportunity. The deduction is available under the Old Tax Regime only.

Deduction Limits Under Section 80D

The deduction limits depend on who the policy covers and their age:

• Self, spouse, and dependent children (below 60 years) — Up to Rs 25,000
• Self, spouse, and dependent children (any member above 60) — Up to Rs 50,000
• Parents (below 60 years) — Additional Rs 25,000
• Parents (above 60 years) — Additional Rs 50,000

This means a person below 60 with parents below 60 can claim a total deduction of Rs 50,000 (Rs 25,000 + Rs 25,000). If parents are senior citizens, the total can go up to Rs 75,000 (Rs 25,000 + Rs 50,000). If both the taxpayer and parents are above 60, the maximum deduction is Rs 1,00,000.

What Expenses Qualify for Deduction?

The following expenses qualify under Section 80D:

• Health insurance premiums — For individual, family floater, or group policies.
• Preventive health check-up — Up to Rs 5,000 per year (included within the overall limit). This is the only component that can be paid in cash.
• Medical expenditure for senior citizens — If your parents are above 60 and not covered by any health insurance, you can claim actual medical expenses up to the applicable limit.
• Contribution to Central Government Health Scheme (CGHS) — Premiums paid to CGHS also qualify.

How to Claim Section 80D Deduction: Step-by-Step

Step 1: Ensure Payments Are Made Correctly

Health insurance premiums must be paid through non-cash modes — cheque, credit card, debit card, net banking, or UPI. Cash payments are not eligible for deduction, except for preventive health check-ups. Keep all payment receipts and premium certificates.

Step 2: Collect Premium Certificates

At the end of the financial year, your insurance company issues a premium paid certificate. Download this from your insurer’s website or app. The certificate shows the total premium paid, GST component, and the policy period. Note that only the premium amount (excluding GST) qualifies for deduction.

Step 3: Include Health Check-Up Expenses

If you or your family members underwent preventive health check-ups during the year, include those expenses up to Rs 5,000. Keep the hospital or diagnostic centre bills and payment receipts.

Step 4: Enter Details While Filing ITR

In your Income Tax Return form, navigate to the deductions section. Under Section 80D, enter the premium paid for self and family, premium paid for parents, and preventive health check-up expenses. The form will automatically calculate the eligible deduction based on the limits.

Step 5: Keep Documents Ready for Verification

While you do not need to upload documents while filing, keep them safely in case the Income Tax Department requests verification. Maintain premium receipts for at least 6 years from the end of the assessment year.

Section 80D for Self-Employed Individuals

Self-employed professionals do not get employer-sponsored health insurance, which makes Section 80D even more valuable. By purchasing a comprehensive health insurance policy for yourself (Rs 25,000 deduction) and your parents (Rs 25,000 to Rs 50,000 deduction), you can save between Rs 5,000 and Rs 30,000 in taxes depending on your tax bracket, while also ensuring medical protection.

Common Mistakes to Avoid

• Claiming deduction for policies paid on behalf of siblings or in-laws (not allowed).
• Paying premiums in cash (not eligible except for health check-ups).
• Forgetting to claim the preventive health check-up deduction.
• Claiming the full premium including GST (only base premium is eligible).
• Not buying separate coverage for parents, missing out on additional deduction.

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Term life insurance is the most affordable and straightforward form of life insurance. It provides a large sum assured to your family in case of your untimely death, at a very low premium. For self-employed individuals who are the primary breadwinners, term insurance is not a luxury — it is a necessity. Buying term insurance online is quick, convenient, and often cheaper than offline policies. Here is your complete guide.

What Is Term Life Insurance?

Term life insurance is a pure protection plan. You pay a fixed premium for a chosen tenure (say 20 or 30 years), and if you pass away during this period, your nominee receives the sum assured. Unlike endowment plans or ULIPs, term insurance has no maturity benefit — if you survive the term, you get nothing back. This is exactly what makes it affordable. A 30-year-old can get Rs 1 crore cover for as little as Rs 700-1,000 per month.

Why Self-Employed Individuals Must Have Term Insurance

As a self-employed professional, you do not have employer-provided group life insurance. If something happens to you, your family loses not just a loved one but also the primary income source. Term insurance ensures your family can maintain their lifestyle, pay off debts, fund your children’s education, and cover daily expenses — even in your absence.

How Much Cover Do You Need?

A common rule of thumb is to have a cover that is 10 to 15 times your annual income. Consider these factors when deciding your sum assured:

• Annual household expenses — Multiply by the number of years your family would need support.
• Outstanding loans — Home loan, car loan, personal loans.
• Future goals — Children’s education, their marriage, spouse’s retirement.
• Existing assets — Subtract savings, investments, and other insurance covers.

For example, if your annual income is Rs 12 lakh, you should consider a cover of at least Rs 1.2 to 1.8 crore.

Step-by-Step Guide to Buying Term Insurance Online

Step 1: Compare Plans Online

Visit insurance comparison websites or go directly to insurer websites. Compare plans from top insurers like LIC, HDFC Life, ICICI Prudential, Max Life, Tata AIA, and SBI Life. Key factors to compare include premium amount, claim settlement ratio (CSR), sum assured options, rider options, and policy terms.

Step 2: Choose Your Plan Features

Select the sum assured, policy term, and premium payment frequency. Consider adding riders such as accidental death benefit, critical illness cover, or waiver of premium. Choose between level cover (fixed sum assured) and increasing cover (sum assured increases annually to account for inflation).

Step 3: Fill the Application Form

Provide your personal details including name, date of birth, address, PAN, Aadhaar, income details, and occupation. As a self-employed individual, you may need to provide your ITR copies or business income proof. Answer the medical questionnaire honestly — misrepresentation can lead to claim rejection.

Step 4: Complete Medical Tests (If Required)

For policies with high sum assured (typically above Rs 50 lakh to Rs 1 crore, depending on age), the insurer may require medical tests. These usually include blood tests, ECG, and a basic health check-up. The insurer arranges these tests at your home or a nearby diagnostic centre at no cost to you.

Step 5: Make Premium Payment

Pay the first premium online through net banking, credit card, debit card, or UPI. Many insurers offer a discount of 5-10% for annual premium payments compared to monthly payments. Online policies are typically 10-20% cheaper than offline policies.

Step 6: Receive Your Policy Document

Once your application is approved (after medical underwriting), the insurer issues your policy document electronically. Download and save it securely. Inform your nominee about the policy details, including the insurer’s name, policy number, and claim process.

Tax Benefits of Term Insurance

Premiums paid for term insurance qualify for tax deduction under Section 80C up to Rs 1.5 lakh per year (under the Old Regime). The death benefit received by the nominee is fully tax-free under Section 10(10D).

Tips for Buying Term Insurance

• Buy early — premiums increase significantly with age.
• Choose a high claim settlement ratio insurer (above 95%).
• Do not underinsure — adequate cover is more important than low premium.
• Disclose all health conditions honestly.
• Review your coverage every 3-5 years as your income and liabilities change.

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A PAN (Permanent Account Number) card is one of the most essential documents in India. It is mandatory for filing income tax returns, opening bank accounts, making large financial transactions, and investing in mutual funds or stocks. Applying for a PAN card online is quick and simple. This step-by-step guide covers both fresh PAN applications and corrections or updates to existing PAN cards.

Who Needs a PAN Card?

Every individual or entity that earns taxable income in India needs a PAN card. Beyond that, PAN is required for various financial activities including opening a bank account or Demat account, buying or selling property, purchasing vehicles, making cash deposits above Rs 50,000, investing in mutual funds, shares, or bonds, and applying for credit cards or loans. For self-employed individuals and freelancers, PAN is especially critical as it is needed for receiving payments, filing GST returns, and managing business transactions.

Types of PAN Applications

• New PAN (Form 49A) — For Indian citizens, including individuals, HUFs, firms, and companies.
• New PAN (Form 49AA) — For foreign nationals and entities.
• PAN Correction/Update — For changes in name, address, date of birth, or other details on an existing PAN card.

How to Apply for a New PAN Card Online

Method 1: Through NSDL (Protean) Portal

Step 1: Visit the NSDL Portal

Go to onlineservices.nsdl.com/paam/endUserRegisterContact.html. Select “New PAN – Indian Citizen (Form 49A)” from the application type dropdown.

Step 2: Fill in Basic Details

Select your category (Individual, HUF, Company, etc.). Enter your title, last name, first name, middle name, date of birth, email address, and mobile number. An acknowledgment number and token will be sent to your email.

Step 3: Complete the Application Form

Fill in the complete form with your personal details including father’s name, Aadhaar number, source of income, address for communication, and office address (if applicable). Choose whether you want a physical PAN card delivered or only an e-PAN.

Step 4: Upload Documents

Upload scanned copies of your identity proof (Aadhaar, passport, or voter ID), address proof (Aadhaar, utility bill, or bank statement), and date of birth proof (Aadhaar, birth certificate, or class 10 marksheet). If you link Aadhaar and e-Sign, no physical documents are needed.

Step 5: Make Payment

The fee for PAN card is Rs 107 (including GST) for Indian communication address and Rs 1,017 for foreign address. Pay through credit/debit card, net banking, or UPI.

Step 6: Submit and Track

After payment, submit the application. You will receive an acknowledgment number. Use this number to track your application status on the NSDL website. The PAN card is typically delivered within 15-20 working days.

Method 2: Through UTIITSL Portal

Visit pan.utiitsl.com and follow a similar process. UTIITSL is the other authorized agency for PAN card processing. The fees and process are nearly identical to NSDL.

Method 3: Instant e-PAN via Income Tax Portal

If you have an Aadhaar card with a linked mobile number, you can get an instant e-PAN for free. Visit incometax.gov.in, click on “Instant e-PAN”, enter your Aadhaar number, verify with OTP, and your e-PAN is generated within minutes. This is the fastest method and is completely free of charge. However, this facility is only for individual applicants who do not already have a PAN.

How to Apply for PAN Card Corrections

If you need to update your name, address, photo, or other details, visit the NSDL or UTIITSL portal and select “Changes or Correction in existing PAN Data”. Fill in the form with your existing PAN number and updated details, upload supporting documents, make the payment, and submit. The corrected PAN card will be delivered within 15-20 working days.

Documents Required for PAN Application

• Proof of Identity — Aadhaar card, voter ID, passport, driving license.
• Proof of Address — Aadhaar card, utility bill (not older than 3 months), bank statement, passport.
• Proof of Date of Birth — Aadhaar card, birth certificate, matriculation certificate, passport.
• Passport-size photographs — Two recent color photographs.

Important Points to Remember

• Having more than one PAN is illegal and attracts a penalty of Rs 10,000.
• Link your PAN with Aadhaar to keep it active. Unlinked PANs become inoperative.
• Always keep a soft copy of your e-PAN for quick reference.
• PAN is required for all financial transactions above specified thresholds.

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Filing Income Tax Returns as a freelancer or self-employed professional in India is different from filing as a salaried employee. You do not receive a Form 16, your income may be irregular, and you need to account for business expenses. But with the right knowledge, filing your ITR can be straightforward. This guide covers everything freelancers and self-employed individuals need to know about filing taxes in India.

Which ITR Form Should Freelancers Use?

Freelancers and self-employed professionals primarily use two ITR forms:

• ITR-3 — For individuals with income from business or profession. Use this if you maintain regular books of accounts and want to claim actual expenses.
• ITR-4 (Sugam) — For those opting for the Presumptive Taxation Scheme under Section 44AD (for business) or Section 44ADA (for professionals). This is simpler and does not require detailed books of accounts.

Understanding Presumptive Taxation (Section 44ADA)

Section 44ADA is a blessing for professionals with gross receipts up to Rs 75 lakh (if digital receipts are at least 95% of total receipts; otherwise Rs 50 lakh). Under this scheme, 50% of your gross receipts are deemed as your taxable income. You do not need to maintain detailed books of accounts or get a tax audit done. Eligible professions include doctors, lawyers, engineers, architects, accountants, interior designers, and other notified professionals.

For example, if you are a freelance web developer who earned Rs 30 lakh in FY 2025-26, your presumptive income would be Rs 15 lakh (50% of Rs 30 lakh). You pay tax only on Rs 15 lakh, and you can claim further deductions under 80C, 80D, etc., under the Old Regime.

Step-by-Step Filing Process for Freelancers

Step 1: Calculate Your Total Income

Add up all income received during the financial year from all clients, both Indian and foreign. Include payments received in your bank account, via PayPal, Payoneer, or any other mode. If you received income in foreign currency, convert it to INR at the exchange rate on the date of receipt.

Step 2: Deduct Business Expenses (ITR-3)

If you are filing ITR-3, you can claim actual business expenses. Common deductible expenses for freelancers include internet and phone bills (business portion), co-working space rent, laptop and equipment depreciation, software subscriptions, travel for client meetings, professional development courses, and office supplies. Keep receipts and invoices for all expenses.

Step 3: Pay Advance Tax

Unlike salaried individuals whose tax is deducted monthly via TDS, self-employed individuals must pay advance tax in quarterly installments. The due dates are June 15 (15%), September 15 (45%), December 15 (75%), and March 15 (100%). Failure to pay advance tax on time attracts interest under Sections 234B and 234C.

Step 4: Claim Deductions

Under the Old Regime, claim all eligible deductions including Section 80C (PPF, ELSS, NPS), Section 80D (health insurance), Section 80CCD(1B) (additional NPS), and Section 80GG (rent deduction if not receiving HRA). These deductions can significantly reduce your tax liability.

Step 5: File Your Return

Log in to incometax.gov.in, select the appropriate ITR form, and fill in your income details. The portal will calculate your tax liability. Pay any balance tax due, and submit the return. E-verify immediately using Aadhaar OTP.

GST Compliance for Freelancers

If your annual turnover exceeds Rs 20 lakh (Rs 10 lakh for special category states), you must register for GST. Services exported to foreign clients qualify for zero-rated supply under GST, meaning you can claim refunds on input GST. Even if GST is not mandatory, voluntary registration can help you claim input tax credits on business expenses.

Common Mistakes Freelancers Make

• Not paying advance tax and getting hit with interest penalties.
• Forgetting to report income from all clients, including foreign payments.
• Not maintaining any records of expenses when filing ITR-3.
• Mixing personal and business expenses in claims.
• Not accounting for TDS deducted by Indian clients (check Form 26AS).

Tax Audit Requirements

A tax audit under Section 44AB is required if your gross receipts exceed the specified limits, or if you opt for presumptive taxation but declare income below the prescribed percentage (50% for 44ADA, 8%/6% for 44AD). The due date for filing returns with a tax audit is October 31.

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One of the most important decisions Indian taxpayers face each year is choosing between the Old Tax Regime and the New Tax Regime. The New Regime offers lower tax rates but eliminates most deductions and exemptions. The Old Regime has higher rates but allows you to claim deductions like 80C, 80D, HRA, and more. This guide helps you understand both regimes and make the right choice for FY 2025-26.

Overview of the Two Tax Regimes

The New Tax Regime was introduced in Budget 2020 and has been revised several times since. For FY 2025-26, the New Regime is the default regime — meaning it applies automatically unless you specifically opt for the Old Regime. Self-employed individuals and those with business income must declare their choice of regime by the due date of filing, and switching back to the Old Regime later is allowed only once in a lifetime.

Tax Slabs Comparison for FY 2025-26

New Tax Regime

• Up to Rs 4,00,000 — Nil
• Rs 4,00,001 to Rs 8,00,000 — 5%
• Rs 8,00,001 to Rs 12,00,000 — 10%
• Rs 12,00,001 to Rs 16,00,000 — 15%
• Rs 16,00,001 to Rs 20,00,000 — 20%
• Rs 20,00,001 to Rs 24,00,000 — 25%
• Above Rs 24,00,000 — 30%

Standard deduction of Rs 75,000 is available. Rebate under Section 87A makes income up to Rs 12,00,000 effectively tax-free.

Old Tax Regime

• Up to Rs 2,50,000 — Nil
• Rs 2,50,001 to Rs 5,00,000 — 5%
• Rs 5,00,001 to Rs 10,00,000 — 20%
• Above Rs 10,00,000 — 30%

Standard deduction of Rs 50,000 for salaried individuals. All deductions under 80C, 80D, HRA, LTA, and others are available.

Deductions Available in Each Regime

Under the Old Regime, you can claim: Section 80C (Rs 1.5 lakh), Section 80D (health insurance), Section 80CCD(1B) (NPS — Rs 50,000), HRA exemption, LTA, home loan interest under Section 24(b), and many more.

Under the New Regime, most of these deductions are not available. The key benefits allowed are: standard deduction of Rs 75,000, employer’s NPS contribution under Section 80CCD(2), and deduction for family pension income.

When to Choose the Old Tax Regime

The Old Regime is generally better if you have significant deductions and exemptions. Consider the Old Regime if:

• Your total deductions under 80C, 80D, 80CCD, and others exceed Rs 3-4 lakh.
• You pay substantial house rent and can claim HRA exemption.
• You have a home loan with interest payments qualifying under Section 24(b).
• You are making the most of NPS for the additional Rs 50,000 deduction.
• Your income falls in the Rs 10-20 lakh range where the Old Regime’s deductions create the most savings.

When to Choose the New Tax Regime

The New Regime works better if you have minimal deductions. Choose the New Regime if:

• You do not have significant investments in 80C instruments.
• You live in your own house and cannot claim HRA.
• You do not have a home loan.
• Your income is below Rs 12 lakh (effectively tax-free under the New Regime due to the Section 87A rebate).
• You prefer simplicity and do not want to track investment proofs and receipts.

How to Calculate: A Practical Comparison

Let us compare for an individual with Rs 15 lakh income, Rs 1.5 lakh in 80C investments, Rs 25,000 in 80D, Rs 2.4 lakh HRA exemption, and Rs 50,000 standard deduction:

Old Regime: Taxable income = Rs 15,00,000 – Rs 1,50,000 – Rs 25,000 – Rs 2,40,000 – Rs 50,000 = Rs 10,35,000. Tax = Rs 1,19,600 + cess = Rs 1,24,384.

New Regime: Taxable income = Rs 15,00,000 – Rs 75,000 = Rs 14,25,000. Tax = Rs 20,000 + Rs 40,000 + Rs 33,750 = Rs 93,750 + cess = Rs 97,500.

In this example, the New Regime saves more despite the deductions. The breakeven varies for each individual, which is why you should calculate for your specific situation.

Make an Informed Choice with Bachatt

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