Filing Under New Regime with No Investments? What to Know
- Nimisha Panda
- Sep 16
- 9 min read
The new tax regime for FY 2025-26 introduces a simplified structure with revised tax slabs, reduced rates, and limited exemptions. This regime is designed to make tax compliance straightforward, reduce paperwork, and enable taxpayers to plan their finances with clarity. While the old regime offered multiple deductions and exemptions, the new regime focuses on lower tax rates with fewer deductions, making it suitable for those who prefer simplicity over extensive tax planning. Understanding the nuances of the new regime, including which deductions are allowed, how to file accurately, and when it is beneficial compared to the old regime, is essential for both salaried and non-salaried taxpayers. Proper planning under the new system ensures compliance, optimises tax liability, and minimises errors during filing. Digital platforms like TaxBuddy provide a seamless interface for navigating these changes, assisting with calculations, and ensuring error-free returns, making the filing process efficient and reliable.
Table of Contents
Key Highlights of the New Tax Regime for FY2025-26
The new tax regime emphasises simplicity, offering lower tax rates across multiple income slabs while removing most exemptions and deductions available under the old regime. Key highlights include:
A structured tax slab system with reduced rates for different income levels.
Removal of several popular deductions such as 80C, 80D (except for NPS and employer contribution), and HRA exemption.
Option to switch between the old and new regimes in certain scenarios.
Applicability to both salaried individuals and non-salaried taxpayers, with self-employed professionals needing careful evaluation.
Focus on compliance ease and faster filing due to limited calculations and documentation.
Latest Slabs & Rebates Under the New Regime
The income tax slabs under the new regime for FY 2025-26 are designed to reduce overall tax burden while maintaining fairness:
Income up to ₹12,00,000 is now tax-free with standard deductions applied automatically.
For income beyond this threshold, incremental slabs are set at 5%, 10%, 15%, 20%, and 25%, depending on the bracket.
Section 87A rebate is available for taxpayers with income below ₹7,00,000, reducing liability further.
Surcharge and cess rates remain applicable for higher income levels.
Is Standard Deduction Allowed in the New Tax Regime?
Yes, the standard deduction is allowed under the new tax regime. Salaried taxpayers can claim a standard deduction of ₹75,000 for FY 2025-26, providing relief without needing detailed expense records. This helps simplify filing, particularly for individuals who do not plan to claim other exemptions or deductions.
What You Cannot Claim Under the New Regime
Several deductions and exemptions available in the old regime are not allowed under the new regime. These include:
House Rent Allowance (HRA)
Section 80C deductions for investments like PPF, ELSS, or life insurance premiums
Standard deductions for business expenses
Medical insurance premiums except NPS contributions
Limited Exemptions Available Without Investments
While most exemptions are removed, a few are still available under the new regime:
Employer contribution to NPS (up to ₹50,000)
Standard deduction for salaried employees
Certain allowances specifically exempted under the Income Tax Act, like transport allowances for disabled employees
Filing Process and Compliance Made Easy
Filing under the new regime is straightforward due to fewer deductions and exemptions to calculate. Taxpayers can:
Use pre-filled ITR forms provided by the Income Tax Department.
Verify TDS and income statements before filing.
File online using JSON utilities for accurate submission.
Platforms like TaxBuddy automate calculations, suggest the correct regime, and provide a seamless filing experience.
When Is the New Regime Better Than the Old Regime?
The new regime is often better for:
Taxpayers who do not have significant investments eligible for 80C, 80D, or other deductions.
Individuals preferring lower rates and fewer calculations.
Salaried employees with simple income streams and minimal exemptions. Choosing the optimal regime requires comparing tax liabilities under both systems using examples or digital tools like TaxBuddy.
Tax Filing Tips for Salaried and Non-Salaried Taxpayers
Accurate Reporting of Salary, TDS, and Other Incomes For salaried taxpayers, it is crucial to report salary components such as basic pay, HRA, allowances, and reimbursements accurately. Ensure that the TDS deducted by your employer matches the figures in your Form 26AS, which is available on the Income Tax Department’s portal. Non-salaried taxpayers, such as freelancers, business owners, or professionals, should maintain a record of all income sources, including consulting fees, rental income, capital gains, and interest income. Accurate reporting prevents mismatches, reduces the risk of notices from the Income Tax Department, and ensures smooth processing of refunds.
Verify Pre-Filled Details Before Filing ITR forms often come with pre-filled information, including TDS, advance tax, and interest income. Always cross-check these details against your records. Mistakes in pre-filled data can lead to incorrect tax calculations, delay refunds, or trigger notices. Take the time to review each field carefully, making adjustments where necessary to reflect your actual income and deductions.
Maintain Proof of Eligible Allowances or Contributions To claim deductions under Sections 80C, 80D, 80E, HRA, or other eligible allowances, keep supporting documents handy. For instance, investment receipts, insurance premiums, and tuition fees should be organized before filing. Proper documentation ensures that claims are accepted without scrutiny and minimizes the chances of errors or disputes with the tax authorities.
Avoid Last-Minute Filing to Prevent Errors and Refund Delays Filing close to the deadline increases the risk of mistakes due to time pressure. Early filing provides sufficient time to gather documents, check TDS credits, and resolve discrepancies. Additionally, early submission often accelerates refund processing since the Income Tax Department typically processes returns on a first-come, first-served basis.
Use Mobile Apps or Online Platforms for Timely Alerts and Reminders Leverage technology to simplify tax compliance. Mobile apps and online platforms provide automated reminders, pre-filled forms, error checks, and guidance for claiming deductions. Tools like TaxBuddy can alert you about updated deadlines, help calculate taxes accurately, and even offer expert-assisted filing to ensure an error-free and seamless filing experience.
Using Apps Like TaxBuddy for Efficient Filing
TaxBuddy helps taxpayers:
Choose the most beneficial tax regime.
Pre-fill forms accurately.
Ensure error-free filing with automated checks.
Track refunds and notifications seamlessly. This makes the filing process faster, easier, and reduces the risk of mistakes.
Common Mistakes to Avoid Under the New Regime
Filing taxes under the new tax regime can offer simplified rates, but it comes with its own set of rules and restrictions. Taxpayers often make errors that can lead to penalties, mismatched returns, or delayed refunds. Understanding these common mistakes is essential for accurate and error-free filing.
Claiming deductions not allowed under the new regime One of the most frequent mistakes is attempting to claim deductions that are only permitted under the old tax regime. While the new regime offers lower tax rates, it significantly limits exemptions and deductions such as House Rent Allowance (HRA), standard deductions, and certain investment-linked deductions under Section 80C. Taxpayers should carefully review the eligibility of deductions before claiming them to avoid disallowance.
Ignoring TDS or income discrepancies TDS credits play a crucial role in calculating tax liability. Many taxpayers overlook minor discrepancies between Form 26AS (TDS statement) and actual income received. Ignoring such differences can lead to mismatches, scrutiny notices, or delayed refunds. It’s important to reconcile all income and TDS details before submitting the ITR.
Filing late or without verifying pre-filled information The new regime may provide pre-filled ITR forms, but filing without verifying these details is risky. Errors in pre-filled salary, interest income, or TDS information can lead to incorrect tax calculations. Filing after the due date also attracts penalties and interest, which could have been avoided with careful verification.
Not reconciling employer contributions and salary details Employers report salary components, including provident fund contributions and perquisites, to the tax authorities. If these details are not reconciled with your ITR, it can create discrepancies. Taxpayers must ensure that employer contributions and salary components are accurately reflected to avoid mismatch notices.
Forgetting to update changes in financial or personal information Life changes, such as a new bank account, address, or changes in investment details, must be updated in the ITR. Forgetting to update such information can lead to failed refund transfers, communication issues, and even penalties. Regularly reviewing and updating personal and financial details ensures smooth processing of returns.
How to Switch Between Old and New Regimes
Taxpayers in India have the flexibility to choose between the old tax regime, which allows various deductions and exemptions, and the new tax regime, which offers lower tax rates but with fewer exemptions. Switching between these regimes can significantly impact the total tax liability, making it essential to understand the rules and make informed decisions.
For salaried individuals without business income, switching is relatively straightforward. They can freely choose either the old or new tax regime each financial year while filing their Income Tax Return (ITR) online. The choice can be made directly on the ITR utility or platform they use, depending on which option provides greater tax savings.
Self-employed professionals and business owners, on the other hand, need to carefully evaluate their income, deductions, and eligible exemptions before switching. The old regime allows deductions under sections such as 80C, 80D, 80E, HRA exemptions, and others, while the new regime simplifies taxes with lower slabs but removes most of these benefits. Comparing these options is critical for accurate tax planning.
Platforms like TaxBuddy provide intuitive comparison tools that allow taxpayers to simulate their tax liability under both regimes. By entering income details, deductions, and exemptions, the system highlights the most tax-efficient option. This helps taxpayers make an informed decision without the risk of underutilizing available benefits.
Switching regimes is a strategic decision that can affect cash flow, advance tax planning, and overall tax liability. Using tools like TaxBuddy ensures the process is seamless, accurate, and optimized for maximum tax efficiency.
Conclusion
The new tax regime for FY 2025-26 offers simplicity, lower rates, and fewer deductions, making tax planning and filing easier for many taxpayers. While it eliminates several exemptions, it is beneficial for those with limited investment-based deductions. Proper understanding of slabs, allowances, and filing processes is crucial to optimize tax liability. Platforms like TaxBuddy simplify this process by providing accurate calculations, error-free filing, and helpful guidance on regime selection. For anyone looking to make tax filing efficient and hassle-free, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and reliable experience.
FAQs
Q1. Can salaried taxpayers claim HRA under the new tax regime? Under the new tax regime, salaried taxpayers cannot claim House Rent Allowance (HRA) exemption. HRA is only available in the old tax regime. However, taxpayers can compare benefits under both regimes to decide which is more beneficial for their financial situation.
Q2. Is the standard deduction applicable for FY 2024-25 (AY 2025-26) in the new regime? Yes, the standard deduction has been increased to ₹75,000 under the new tax regime for FY 2024-25. This is applicable to salaried and pensioned individuals and helps reduce taxable income without any additional documentation.
Q3. Which deductions are completely removed under the new regime? Most section-based deductions like 80C (LIC, PPF, EPF), 80D (health insurance), 80E (education loan interest), and HRA are not available under the new regime. Only select exemptions such as NPS employer contributions remain partially allowed.
Q4. Can self-employed professionals choose the new tax regime? Yes, self-employed professionals and business owners have the option to choose the new tax regime. They must evaluate available deductions and income to determine if the new regime results in lower tax liability.
Q5. How does Section 87A rebate apply in the new regime? Section 87A provides a rebate of up to ₹12,500 for taxpayers with taxable income up to ₹5 lakh. The rebate applies automatically in the new regime and reduces the overall tax payable, lowering the burden on low-income earners.
Q6. Can I switch from the new regime to the old regime in the same year? Yes, individual taxpayers can switch between the old and new regimes each financial year while filing their ITR. However, once the return is filed for that year, the chosen regime is final unless a revised return is filed before the due date.
Q7. Are employer contributions to NPS allowed under the new regime? Yes, employer contributions to the National Pension Scheme (NPS) up to 10% of salary are allowed as a deduction even under the new regime. This encourages retirement savings while reducing taxable income.
Q8. Does using TaxBuddy help in regime selection? Yes, TaxBuddy provides an AI-driven comparison of old vs. new tax regimes based on income, deductions, and exemptions. This helps taxpayers select the most beneficial regime and ensures accurate ITR filing without errors.
Q9. What happens if I file late under the new regime? Late filing beyond the due date results in belated return penalties of up to ₹5,000, along with interest on outstanding tax. Refunds are also delayed, and belated returns are processed after on-time filings.
Q10. Are TDS credits automatically reflected in the new regime? Yes, TDS (Tax Deducted at Source) credits are reflected automatically in pre-filled ITR forms. However, it is important to verify them to avoid mismatches, which can delay refund processing.
Q11. How to avoid mistakes in pre-filled ITR forms? Check all pre-filled details such as income, TDS, and deductions before submission. Ensure personal information, PAN, and bank account details are accurate. Using platforms like TaxBuddy can reduce errors through automated validation.
Q12. Can I claim medical insurance premiums under the new regime? Medical insurance premiums under Section 80D are not allowed under the new regime. This deduction is only available under the old regime, so taxpayers should compare their options before choosing the filing method.
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