5 Ways to Save Income Tax in New Tax Regime (FY 2025-26)

Most tax savings posts you see online are built for the old regime. ELSS, PPF, LIC, HRA claims.  

These are not working anymore, let’s what we can save in new tax regime 

The new regime has lower tax rates. But fewer deductions. And if you don’t understand what still works, you end up paying more than you should, then this blog is for you. 

Now we won’t promise like there are 15 ways in which you can save in new tax regime, because that isn’t the case. We will give you 5 good long-term strategies that are worth understanding, and you’ll find good saving opportunities in them. 

Why Tax Saving Feels Different in the New Regime 

In the old regime, things were simple: invest in tax-saving instruments and claim deductions. 80C, 80D, HRA, home loan interest. The more you claimed, the less you paid. 

The new regime changed that completely. 

What this means in practice:  

Tax saving has moved from "what you buy" to "how your salary is structured." And most salaried people have not caught up with that shift. 

The five strategies below address exactly that. 

This is the single most powerful tax-saving option available to salaried employees in the new regime, and most people have never asked their HR about it. 

Here is how it works. Under Section 80CCD(2), if your employer puts money into your NPS account as part of your CTC, that amount is not taxed in your hands. Private sector employees can have up to 10% of their basic salary contributed this way. Government employees can have up to 14%. 

Think of it this way. Say your basic salary is Rs. 16 lakh a year. If your employer routes Rs. 60,000 into your NPS, that Rs. 60,000 never enters your taxable income. You pay less TDS every month. Your take-home does not drop because it comes from your existing CTC, just structured differently.  

Why do most people miss this? Because it requires your employer to participate. It is not something you set up on your own through an app.  

You need to ask HR if your company offers CTC restructuring, and if NPS contributions can be included. 

Many companies already allow this but nobody opts in. If your employer does not offer it, it is worth raising formally because it costs the company nothing extra. 

The bonus: NPS grows tax-free. At retirement, 60% of the corpus can be withdrawn completely tax-free. It is not just a tax tool. It is also a genuine long-term wealth builder. 

If your CTC is flexible and you want to figure out how to restructure it, talking to a CA is the fastest way to get this right. You can book an online CA consultation here. 

This one sounds counterintuitive. Who doesn’t want higher in-hand pay? 

But cash salary is fully taxable. Some non-cash components in your salary are either fully exempt or taxed at a much lower effective rate. If you are converting everything to cash because it feels like more money, you are likely paying more tax than you need to. 

The components worth considering: 

• Phone and internet reimbursement. If your company reimburses your actual usage costs, that amount is not treated as taxable income. This is different from an allowance added to your salary. You need actual bills and it needs to be a reimbursement, not a flat add-on. 
• Meal cards. Up to Rs. 50 per meal, roughly Rs. 26,400 a year, is tax-exempt. A lot of companies offer Sodexo or similar. If yours does and you have not opted in, you are leaving tax-free money on the table. 
• Leave Travel Allowance. Still applies in the new regime in limited form. If you travel domestically, the actual travel cost can be claimed twice in a block of four years. 
• Company-provided equipment. Laptops, phones, or other devices provided for work use are not treated as taxable perquisites for employees. If you are buying your own work equipment and not getting reimbursed, you are paying for something your employer could provide tax-free. 

A salary structure review is worth doing once a year. Digilawyer offers salary and document reviews that can identify gaps in how your income is set up. 

There is a common belief that HRA is irrelevant in the new regime. That is not entirely accurate. 

HRA itself, as a deduction under Section 10(13A), is not claimable in the new regime the way it was before. So if you were using HRA to reduce your taxable income significantly under the old regime, that specific benefit goes away. 

But here is what still matters. 

If you pay rent and your salary includes an HRA component, that component can still be designed to reflect your actual housing cost rather than being lumped into basic pay. The way your salary is broken down affects how much of it is taxable. 

The mistake people make is keeping a salary structure designed for the old regime when they have switched to the new one. A basic-heavy salary with a small HRA component might have been optimal before. In the new regime, that same structure can leave you paying more than necessary because the components are not aligned with what still works. 

When you switch regimes, it is worth reviewing your salary breakup, not just your tax calculation. The structure matters. 

These two things are automatic in the new regime, but a surprising number of people do not factor them into their planning. 

Let's take a look at new income tax regime to understand this better 

➤ The standard deduction is Rs. 75,000 for all salaried employees and pensioners. It is subtracted from your gross salary before any tax is calculated. No proof needed, you don’t even need to file ITR  in this case. It just happens. 

➤ The 87A rebate means that if your total taxable income after all deductions is under Rs. 8 lakh, your tax bill is zero. Completely wiped out. 

These two together set a meaningful floor for planning. If you earn around Rs. 8 to 9 lakh a year and you also have employer NPS contributions, you could realistically be close to or under the Rs. 8 lakh threshold. That would mean paying zero tax. 

The reason this matters as a strategy: many people assume they owe tax without running the actual numbers. They see a gross salary figure, mentally calculate a rough percentage, and assume that is their bill. Often it is not. 

Sit down and work it out properly: gross salary minus standard deduction minus NPS contribution equals actual taxable income. Then check where that falls on the slab and whether the 87A rebate applies. It takes twenty minutes and can save thousands. An easiest thing you can do is compare them through our guide on Old vs New tax regime 

If the numbers feel confusing, a quick CA consultation can walk you through it with your actual figures in under an hour. 

This is the biggest mindset shift the new regime requires.  

In the old regime, you saved tax by investing. The act of investing itself reduced your taxable income. In the new regime, the investment you make today does not reduce your tax today. So what is the point?  

The point is what happens when you sell. 

• Long-term capital gains (LTCG) on equity investments are taxed at 12.5% beyond Rs. 1.25 lakh. Debt investments held long enough have their own tax treatment. The tax on gains from investments is separate from income tax and works the same way in both regimes. 

So the strategy is this: if you invest in equities and hold them for the long term, you are building wealth that will eventually be taxed at 12.5% rather than your income slab rate of 20% or 30%. Over a career, that difference is enormous. We think knowing which ITR form to file can also help for the same. 

This is not about avoiding tax. It is about choosing the form of income that gets taxed at a lower rate. Salary income taxed at 30% versus investment gains taxed at 12.5% are very different outcomes from the same amount of money. 

The practical steps: 

• Invest consistently in equity over time. 
• Hold for more than a year to access LTCG rates. 
• Plan which financial year you sell in, especially if you have multiple investments, to stay under thresholds where possible. 
• Keep records. LTCG calculations require knowing your cost basis and holding period. 

This is where having an accountant or CA who understands both your salary and your investments becomes genuinely useful. The two should be planned together, not separately. 

One extra tip of advise just know when to file ITR, because if you skip it you might get a notice from the ITR department, and then you will have to face the consequences in that case. We infact have many cases where the deadline is skipped, and there is a lot of unnecessary hassle to avoid the penalties, sometimes they are not even removed. 

When You Should Consult DigiLawyer? 

You do not need an expert for everything. The strategies above are things you can think through yourself. But there are situations where getting professional help pays for itself several times over. 

Talk to a CA or tax consultant if: 

• Your CTC is above Rs. 10 lakh and you have never done a salary structure review. 
• You are not sure whether the old or new regime is better for your specific situation this year. 
• You have investments in equity, mutual funds, or real estate and you are not sure how the capital gains will be taxed. 
• You received a salary increment or joined a new company and your structure changed. 
• You got an income tax notice and are not sure what triggered it or how to respond. 

Digilawyer has CAs who can review your exact situation and tell you what makes sense for you specifically, not generically. 

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