Tax Deduction in New Regime: Finance Minister Nirmala Sitharaman presented the Budget 2025 on February 1. The middle class has received significant relief in this budget. The government announced that there will be no tax on income up to Rs 12 lakh. For earnings above Rs 12 lakh annually, tax will be applied according to the applicable slab. However, with proper tax planning, you can still save tax, even on earnings above Rs 12 lakh. In some cases, your tax liability could be zero, even if your annual salary is Rs 13.7 lakh, by following a few simple steps.

According to tax experts, to make your tax zero on an income of up to Rs 13.7 lakh per annum, you need to invest in the National Pension System (NPS). In the new tax regime, a tax deduction is available on NPS contributions up to 14% of the basic salary (plus DA). This deduction is provided under Section 80CCD(2) of the Income Tax Act. However, this deduction is only available if the employer/company offers the facility to invest in NPS.

Here’s how tax can be saved on an annual salary of Rs 13.7 lakh

Let’s assume the annual salary of an employee is Rs 13.7 lakh. Fifty percent of the basic salary is Rs 6.85 lakh, so the NPS contribution at 14% will be Rs 95,900. The employee can claim a tax deduction of Rs 95,900 annually for the NPS contribution. If the standard deduction of Rs 75,000 is added, the total deduction becomes Rs 1.70 lakh. This way, the employee will not have to pay any tax.

NPS was started in 2004. If you want to get a good pension after your retirement, the National Pension System (NPS) can be a good option for you. NPS is a government scheme linked to the market. It was introduced by the government in 2004 and opened to the general public in 2009.

Top Budget 2025 Key Highlights:

1. New Tax Update: In the Budget 2025 announcement, Nirmala Sitharaman proposed revised tax rates, stating that income up to INR 12 lakh will be exempt from income tax under the new tax regime.

2. Capex: India’s capital expenditure (Capex) rises to INR 11.21 lakh crore in the budget estimates for FY2025-26, compared to INR 11.11 lakh crore in FY2024-25, according to the budget data.

3. Bihar Makhana: Budget 2025 announced India’s plan to establish a Makhana Board in Bihar to improve the production, processing, value addition, and marketing of Makhana.

4. Job Scheme: The Modi 3.0 government outlined its plan to generate 22 lakh jobs through this scheme, aiming to boost the productivity, quality, and competitiveness of India’s footwear and
leather sector.

5. UDAN Scheme: The government also plans to launch a modified version of the UDAN Scheme, aiming to enhance regional connectivity to 120 new destinations and carry 4 crore passengers over the next 10 years.