Income Tax 2025: How to Make Your Tax Bill Zero with Simple Steps
Paying income tax every year can feel like a burden, but with smart planning, you could pay zero tax under the new rules announced in the 2025 budget. Here’s what you need to know before filing your next income tax return.
New Delhi: Paying income tax every year can feel like a burden, but with smart planning, you could pay zero tax under the new rules announced in the 2025 budget. Here’s what you need to know before filing your next income tax return.
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Two Tax Regimes to Choose From: Old vs New
Currently, taxpayers in India can choose between two tax regimes:
- Old Tax Regime: Offers multiple deductions and exemptions such as house rent allowance, insurance premiums, home loan interest, and investments under Section 80C. These help reduce your taxable income.
- New Tax Regime: Features lower tax rates but removes most deductions and exemptions for a simpler filing process.
What’s New in the 2025 Budget?
Finance Minister Nirmala Sitharaman announced major changes for the new tax regime in her 2025 budget speech:
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- No tax for income up to Rs 12 lakh under the new regime.
- Salaried taxpayers get an increased standard deduction from Rs 50,000 to Rs 75,000.
- This means salaried individuals earning up to Rs 12.75 lakh can pay zero income tax under the new regime.
Benefits of the Old Tax Regime
The old regime is still beneficial for many taxpayers, especially those with:
- Home loans
- Insurance policies
- Significant investments claiming deductions
Additionally, the old regime offers different tax-free income limits based on age:
- Up to Rs 2.5 lakh for individuals below 60 years
- Up to Rs 3 lakh for senior citizens (60-79 years)
- Up to Rs 5 lakh for super senior citizens (80 years and above)
How to Decide Which Tax Regime to Choose?
The best choice depends on your individual financial situation:
- If you have many tax-saving investments and eligible deductions, the old regime might save you more.
- If you prefer simplicity and fewer documents, the new regime with its higher tax-free limit is ideal.
Plan Ahead to Save More
Before filing your income tax return, compare both regimes carefully. Proper planning can help you take full advantage of the new tax benefits and potentially reduce your tax liability to zero, allowing you to save more money.
