Mr. X has exercised the option under section 202(4) of the Income-tax Act, 2025, so the new tax regime…

Section 123 of the Income-tax Act, 2025 allows an individual a deduction, up to Rs. 1,50,000 in aggregate, for sums listed in Schedule XV, which includes a five years term deposit under the Post Office Time Deposit Rules, 1981. Claiming a deduction that the statute itself offers is lawful tax planning, so "Mr. X is guilty of neither tax evasion nor tax avoidance." The deduction is available only outside the new tax regime, because section 202(2) computes income under that regime without Chapter VIII deductions such as section 123. This corresponds to section 80C of the repealed Income-tax Act, 1961.