Tax Planning Strategies for FY 2024-25 to Reduce Tax Burden
- Asharam Swain
- 6 days ago
- 9 min read
Tax planning for FY 2024-25 revolves around using the revised income tax slabs, maximizing eligible deductions, and aligning investments with the latest Budget reforms. The government’s emphasis on a simplified new regime and increased standard deductions offers individuals more flexibility in optimizing their tax liability. By choosing the right mix of exemptions, salary structuring, and investments, taxpayers can significantly reduce their overall tax outgo while ensuring compliance with updated rules.
Table of Contents
Revised Income Tax Slabs and Regime for FY 2024-25
The Union Budget 2025 introduced a more progressive and simplified tax structure under the new regime, making it the default option for all taxpayers. The revised slabs aim to balance tax relief with compliance ease. Under the new regime effective from April 1, 2025, income up to ₹4 lakh is fully exempt from tax, while higher income brackets are taxed progressively, reaching 30% for incomes above ₹24 lakh. This change provides significant relief to middle-income earners.
A key update is the increase in the standard deduction from ₹50,000 to ₹75,000 for salaried employees and pensioners, improving disposable income. Taxpayers preferring the old regime can still opt for it if they claim multiple deductions such as HRA, LTA, and 80C investments. However, the government’s reforms indicate a gradual shift toward the simplified structure of the new regime, encouraging voluntary adoption through higher exemption limits and fewer complications in compliance.
Choosing Between the Old and New Tax Regimes
The choice between the old and new tax regimes depends on the taxpayer’s financial profile, income composition, and deduction eligibility. The new regime benefits individuals who prefer minimal paperwork and do not rely heavily on exemptions, while the old regime continues to favor those claiming significant deductions under Sections 80C, 80D, 24(b), and others.
For instance, a taxpayer with few deductions might pay less tax under the new regime due to its higher exemption thresholds and reduced rates. Conversely, someone with large investments in provident funds, life insurance, or housing loans could find the old regime more beneficial. Using a platform like TaxBuddy simplifies this decision through automated comparisons that calculate which regime yields lower taxes based on your income and declared deductions.
Maximize Chapter VIA Deductions and Tax Benefits
Deductions under Chapter VIA of the Income Tax Act form the foundation of any effective tax planning strategy under the old regime. Section 80C allows taxpayers to invest up to ₹1.5 lakh in eligible instruments such as PPF, EPF, ELSS, ULIPs, and five-year fixed deposits. This section alone can substantially lower taxable income.
Additionally, Section 80CCD(1B) offers an extra deduction of ₹50,000 for contributions to the National Pension System (NPS), encouraging long-term retirement planning. Under Section 80D, individuals can claim deductions for health insurance premiums for themselves, their spouse, children, and parents. Meanwhile, Section 24(b) permits up to ₹2 lakh deduction on home loan interest for self-occupied properties under the old regime.
Taxpayers should also consider HRA, LTA, and other allowances when planning salary structures for maximum savings. Strategic use of these deductions not only minimizes taxable income but also aligns financial planning with long-term wealth creation.
Capital Gains Planning and Loss Harvesting
Capital gains management is a crucial part of tax planning, especially for investors in equities, mutual funds, and real estate. The government increased the Long-Term Capital Gains (LTCG) exemption limit to ₹1.25 lakh, providing additional relief to investors. To make the most of this, individuals can adopt tax-loss harvesting—selling underperforming investments to offset gains from profitable ones.
Short-term capital gains (STCG) on equity funds continue to be taxed at 15%, while long-term gains exceeding ₹1.25 lakh attract a 10% rate. Investors should maintain accurate records of purchase and sale dates to ensure correct categorization between short- and long-term gains. Regularly reviewing portfolios and timing exits strategically helps minimize tax liability while maintaining portfolio efficiency.
Tax Planning for Salaried Employees and Startups
For salaried employees, tax planning begins with salary structuring. Components like HRA, LTA, conveyance allowances, and meal vouchers can significantly reduce taxable income under the old regime. Submitting rent receipts, travel proofs, and investment declarations on time ensures full utilization of eligible exemptions. The new regime, while simpler, excludes these allowances—making it more suitable for employees without major deductions.
Startups continue to enjoy strong incentives under Section 80-IAC. Companies incorporated before April 1, 2030, can claim a 100% tax deduction on profits for three consecutive years out of ten. This helps emerging businesses retain cash flow for expansion and innovation. Entrepreneurs should maintain proper accounting records and register under the Startup India initiative to qualify for these benefits.
Additional Tips to Reduce Tax Liability in 2025
Contribute to NPS to claim an additional ₹50,000 deduction under Section 80CCD(1B).
Invest in ELSS mutual funds for high returns with tax-saving benefits under Section 80C.
Pay health insurance premiums through digital modes to qualify for Section 80D deductions.
If eligible, submit Form 15G or 15H to avoid unnecessary TDS deductions on interest income.
Optimize capital gains tax through tax-loss harvesting and timely reinvestment.
Maintain accurate documentation of all tax-saving investments and salary proofs for verification.
Following these steps throughout the financial year ensures a smoother filing experience and minimizes the possibility of notices or mismatches during e-verification.
How TaxBuddy Simplifies Tax Planning and Filing
TaxBuddy simplifies tax planning by combining automation with expert insights. The platform analyzes income, deductions, and regime choices to calculate the most tax-efficient approach. Its AI-driven interface automatically validates TDS entries, highlights missing deductions, and compares old vs. new regime savings before filing.
Users can opt for self-filing with smart guidance or choose expert-assisted filing, where certified professionals handle end-to-end preparation and submission. The service also provides continuous post-filing support, helping taxpayers respond to notices and clarifications from the department. TaxBuddy’s user-friendly dashboard and mobile app ensure accuracy, compliance, and peace of mind at every stage of the process.
Conclusion
The financial year 2024-25 presents multiple opportunities to lower tax liability through smart planning, timely investments, and informed regime selection. The revised slabs, higher standard deduction, and enhanced exemption limits under the new regime make tax management simpler for individuals and businesses alike. At the same time, those preferring traditional savings instruments can still benefit under the old regime through Chapter VIA deductions.
To ensure a smooth, accurate, and hassle-free filing experience, it’s wise to use a trusted digital platform. For anyone looking for assistance in tax filing, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options? Yes, TaxBuddy offers both self-filing and expert-assisted plans to suit different types of taxpayers. The self-filing option is ideal for individuals comfortable filing their returns independently—it includes AI-driven suggestions, automatic form validations, and instant error checks to ensure accuracy. The expert-assisted plan, on the other hand, connects users with certified tax professionals who handle every step, from verifying TDS and deductions to preparing and filing the return. This dual model ensures flexibility for both self-reliant filers and those who prefer professional oversight.
Q2. Which is the best site to file ITR? The best site depends on the level of guidance and convenience required. The government’s official e-filing portal (incometax.gov.in) is reliable for direct filing but may feel complex for those unfamiliar with tax nuances. Platforms like TaxBuddy, however, simplify the process through automation, personalized assistance, and real-time validation. Users can upload Form 16, AIS, or TIS data, and the system auto-fills the return accurately. Additionally, TaxBuddy’s expert-assisted plan ensures human verification for every entry, minimizing errors and helping taxpayers maximize deductions.
Q3. Where to file an income tax return? An income tax return can be filed online through the official Income Tax Department portal or trusted third-party platforms like TaxBuddy. Filing online is faster, more secure, and ensures timely acknowledgment. TaxBuddy’s guided filing interface helps users complete their returns without confusion, automatically identifying applicable forms such as ITR-1, ITR-2, or ITR-3 based on income sources. The system also checks TDS mismatches, validates PAN-Aadhaar linkage, and generates acknowledgment numbers upon submission—ensuring complete compliance in one place.
Q4. Which regime saves more tax in FY 2024-25—old or new? The new tax regime benefits taxpayers who do not claim major deductions, as it offers reduced tax rates and simplified compliance. In contrast, the old regime remains advantageous for those who invest heavily in tax-saving instruments like PPF, ELSS, or NPS and claim allowances such as HRA or LTA. For example, a salaried individual with high investments and home loan interest may pay less under the old regime, while someone with limited deductions may save more under the new regime. TaxBuddy’s AI-based regime comparison tool instantly calculates the tax under both regimes, helping users pick the most efficient one.
Q5. What is the standard deduction for FY 2024-25? The standard deduction has been raised to ₹75,000 under the new regime for salaried individuals and pensioners. This increase from ₹50,000 in the previous year directly enhances take-home income by lowering taxable salary. The deduction is available automatically—no proof submission is required—and applies equally to those drawing pension income. This revision makes the new regime more appealing for middle-income earners by offering upfront relief without complex documentation.
Q6. What is the TDS exemption limit on bank interest? For FY 2024-25, the TDS exemption limit on bank interest income has been increased to ₹1,00,000 for senior citizens and ₹50,000 for other taxpayers. Banks and post offices will not deduct TDS unless the interest earned exceeds these thresholds. To avoid unnecessary deductions, eligible taxpayers can submit Form 15G (for individuals) or 15H (for senior citizens) to their banks, declaring that their total income is below the taxable limit. Ensuring PAN linkage with the bank account also helps in correct TDS reporting and faster refunds.
Q7. How can excess TDS be claimed? If excess TDS has been deducted during the financial year, taxpayers can claim it back while filing their Income Tax Return. The process involves reporting the actual income, verifying Form 26AS or AIS for TDS details, and ensuring PAN-linked bank details are correct. Once the return is processed, the Income Tax Department issues the refund directly to the registered bank account. TaxBuddy simplifies this by automatically importing TDS data, identifying excess deductions, and ensuring refunds are claimed accurately without manual intervention.
Q8. Can startups still avail tax holidays? Yes, eligible startups can still claim tax holidays under Section 80-IAC of the Income Tax Act. Startups incorporated before April 1, 2030, are entitled to a 100% deduction on profits for any three consecutive years out of ten, provided they meet the prescribed conditions. The business must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) and involved in innovation or technology development. This exemption helps startups retain more capital for reinvestment and growth. Proper compliance and annual audit certification are essential to continue availing the benefit.
Q9. Are capital gains taxable under both regimes? Yes, capital gains are taxable under both the old and new regimes, but the method of claiming exemptions differs. Short-term capital gains (STCG) from listed equity are taxed at 15%, while long-term capital gains (LTCG) above ₹1.25 lakh attract 10% tax without indexation. Under the old regime, certain exemptions can be claimed under Sections 54, 54EC, and 54F by reinvesting in specified assets such as residential property or NHAI bonds. Since exemptions are limited in the new regime, investors can use tax-loss harvesting to offset gains with losses and reduce their overall liability.
Q10. Is HRA exemption available under the new regime? No, House Rent Allowance (HRA) exemption is not available under the new tax regime. Taxpayers who wish to claim HRA deductions must opt for the old regime. Under the old regime, HRA exemption is calculated based on the least of the following three: (1) actual HRA received, (2) 50% of salary if residing in a metro city or 40% for non-metro cities, or (3) rent paid minus 10% of salary. Employees should keep rent receipts and landlord details for proof during verification. Those without significant deductions may still prefer the new regime despite the loss of this exemption.
Q11. How can salary restructuring help reduce taxes? Salary restructuring is an effective way to reduce taxable income under the old regime. Employers can include allowances such as HRA, LTA, meal vouchers, education allowance, and conveyance reimbursements to enhance tax efficiency. For example, travel reimbursements and food coupons are often tax-exempt up to specific limits. Employees can also opt for deductions under Section 80C through salary-linked investments like EPF. By strategically structuring their compensation, employees can ensure maximum benefits without violating compliance norms. Annual investment proofs should be submitted to employers for validation.
Q12. How does TaxBuddy help in regime selection? TaxBuddy’s AI-based tax comparison feature simplifies the regime selection process by analyzing income, deductions, and eligible exemptions. The platform calculates total payable tax under both regimes, highlighting which one offers greater savings. Users can also simulate future investments to see how their tax outgo changes between regimes. Once the optimal regime is identified, TaxBuddy guides users through error-free filing with automatic deduction checks and pre-filled data from Form 16, AIS, and TIS. This ensures both accuracy and maximum savings without the need for manual calculations.
Comments