NewDelhi: Under the New Tax Regime, individuals with a net taxable income of up to Rs 12 lakh per annum pay zero income tax for the financial year 2025-26. If you are earning a Rs 14.65 lakh salary, it could be tax-free just like someone who is earning Rs 12 lakh. Under the New Income Tax Regime, you can pay zero income tax even with a salary of Rs 14.65 lakh by strategically utilising deductions.
Components that help make Rs 14.65 lakh income tax-free
A standard deduction of Rs 75,000 is available for salaried individuals under the New Tax Regime. While most taxpayers believe that the new regime only offers a standard deduction of Rs 75,000, they must note that employer contributions and retirement benefits are highly tax-efficient. When a deduction strategy is applied, employees can make their salary of Rs 14.65 lakh tax-free.
NPS contribution
If you contribute to the National Pension Scheme (NPS) you can deduct up to 14 percent of your basic salary invested in NPS. Employer NPS contributions up to 14 percent of basic salary plus DA are tax-free under Section 80CCD(2) in the new tax regime.
EPF contribution
The employer’s contribution to the Employees’ Provident Fund (EPF) is also tax-free. 12 percent of the basic salary plus DA contributed by the employer to EPF is tax-exempt.
NPS and EPF can significantly reduce your taxable income when utilized optimally. When this is combined with the standard deduction of Rs 75,000, the effective taxable salary may fall below the point at which tax liability becomes zero.
However, employees must note that they have NPS and EPF contributions included in their salary structure to receive a tax-free benefit with an income of Rs 14.65 lakh.
How Rs 14.65 lakh income can be tax-free under New Tax Regime?
Here’s the calculation showing how salaried employees with a CTC of Rs 14.65 lakh can pay no tax under the New Income Tax Regime.
Start with your total annual pay of Rs 14,65,000 (assumed amount).
The standard deduction given to all salaried employees is Rs 75,000. (Rs 14,65,000 – Rs 75,000) = Rs 13,90,000
The employer’s contribution to EPF (up to 12 percent of basic) is tax-free. (Rs 13,90,000 – Rs 87,900) = Rs 13,02,100
The employer’s contribution to NPS (up to 14 percent of basic) is tax-free. (Rs 13,02,100 – Rs 1,02,550) = Rs 11,99,550
Your net taxable income after these specific deductions is Rs 11,99,550.
Your tax liability is Rs 0. Since Rs 11,99,550 is under Rs 12 Lakh, you pay Rs 0 tax.
With these deductions, your net taxable income is less than Rs 12 lakh which makes you eligible for zero tax liability with a salary of Rs 14.65 lakh.
Editor’s take
The above salary bracket is an assumptive figure. However, people in the same bracket can use the above deductions to bring down their taxes to zero.
Bureau Report
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