New tax regime: 7 ways to reduce tax for FY 2025-26

Published 17 June 2026 · india

1. Employer’s contribution to NPS 2. Employer’s contribution to EPF also enjoys tax benefits 3. Standard deduction continues under the new tax regime 4. Deduction

1. Employer’s contribution to NPS 2. Employer’s contribution to EPF also enjoys tax benefits 3. Standard deduction continues under the new tax regime 4. Deduction of home loan interest on let-out property 5. Exempt perquisites and reimbursements under the new tax regime Meal benefits Telecom and Broadband Reimbursements Mobile/Device leasing Health, wellness, and financial wellness programmes 6. Allowances exempt under the new tax regime 7. Exemption on gifts given by employer Additional benefits for family pensioners under new tax regime Many taxpayers assume that the new tax regime offers no scope for tax savings. But several deductions, exemptions, and employer-provided benefits are still available under the new tax regime that can help you reduce your tax liability while filing an income tax return (ITR) for FY 2025-26.Here are 7 ways for salaried individuals to lower their tax burden under the new tax regime:The employer’s contribution to the Pension System (NPS) under Section 80CCD(2) remains one of the most powerful ta saving benefits available under the new tax regime. The deduction is available to all for employer contributions of up to 14% of the salary (basic salary plus dearness allowance).“This deduction is available over and above the standard deduction of Rs 75,000,” says Sudhir Kaushik, Co-founder & CEO, Taxspanner.For instance, if an employee’s basic salary plus dearness allowance is Rs 12 lakh and the employer contributes 14% to NPS, the Rs 1.68 lakh contribution is eligible for tax deduction. For a taxpayer in the 30% tax bracket, this could translate into tax savings of approximately Rs 52,000, including cess, he explains.However, it should be noted that your own contribution to NPS does not qualify for deduction under the new tax regime.Employees’ own contributions to the Employees’ Provident Fund (EPF) are not eligible for deduction because the Section 80C benefit is not available under the new regime.“However, employer’s contributions to EPF continue to enjoy tax benefits subject to the prescribed limits,” says CA Abhishek Soni, CEO & Co-founder, Tax2win.Additionally, for ITR filing for the tax year 2026-27, the due date of which is July 31, 2027, the employer’s contribution to a Recognised Provident Fund (RPF) continues to enjoy tax exemption under the new tax regime.“However, where the aggregate contribution of the employer to the Recognized Provident Fund (RPF), Pension System (NPS), and Approved Superannuation Fund exceeds Rs 7,50,000 during a tax year, the excess amount becomes taxable as a perquisite under Section 17(1)(h) of the Income-tax Act, 2025,” says CA Milin Bakhai, Partner, Direct Tax, N.