Income tax slabs 2025-26: Your income tax outgo may become zero despite drawing ₹14.65 lakh annual salary. Here is how | Mint

Income tax slabs 2025-26: You are in the ₹12 lakh bracket and dreaming of a salary appraisal. Don’t let income tax worries hold you back! Under the new income tax regime for 2025-26, you can pay zero income tax even with a ₹14.65 lakh salary. Under the new income tax regime, you must utilise deductions strategically to achieve a zero tax liability with a ₹14.65 lakh salary. So, even if your income rises, you can keep more money in your pocket. Here’s how.

How can ₹14.65 lakh income be tax-free?

Abhishek Soni, CEO and Co-founder of Tax2win, explains how salaried employees with a Cost to Company (CTC) of ₹14.65 Lakh can pay zero tax under the new income tax regime. Here’s a breakdown.

Annual Income (CTC): 14,65,000

Basic Salary (50% of CTC): 7,32,500

NPS Employer Contribution (14% of Basic): 1,02,550

EPF Employer Contribution (12% of Basic): 87,900

Standard Deduction: 75,000

Taxable Income (after deductions): 11,99,550

With these deductions, your net taxable income falls below ₹12 lakh, making you eligible for zero tax liability under the new regime.

“However, please note that employees must have NPS and EPF contributions included in their salary structure to avail of this tax advantage, then only this benefit till 14. 65 lakh can be claimed. This benefit applies only to salaried employees with structured employer contributions,” said Abhishek Soni.

Standard Deduction

A standard deduction of ₹75,000 is available for salaried individuals under the new regime.

National Pension Scheme (NPS)

Contribute to the National Pension Scheme (NPS) under Section 80CCD(2). You can deduct up to 14% of your basic salary invested in NPS.

Employee’s Provident Fund (EPF)

The employer’s contribution to EPF (12% of basic salary) is also tax-deductible.

Why this works under the new income tax regime

Higher tax rebate: The rebate limit has been increased from ₹7 lakh to ₹12 lakh, significantly benefiting middle and high-income earners.

Increased NPS deduction: Employer NPS contributions up to 14% of basic salary plus DA are tax-free under Section 80CCD(2) in the new tax regime (10% in the old regime).

EPF contributions are tax-deductible: 12% of the basic salary plus DA contributed by the employer to EPF is also tax-exempt.

Latest income tax slabs 2025-26

₹0 – ₹4 lakh → No Tax

₹4 lakh – ₹8 lakh → 5%

₹8 lakh – ₹12 lakh → 10%

₹12 lakh – ₹16 lakh → 15%

₹16 lakh – ₹20 lakh → 20%

₹20 lakh – ₹24 lakh → 25%

₹24 lakh & above → 30%

Income Tax Budget 2025

Union Finance Minister Nirmala Sitharaman announced various measures while presenting the Union Budget 2025-26 in the Parliament on 1 February. The most important for middle-class and salaried taxpayers was the₹12 lakh (or ₹12.75 lakh for salaried taxpayers with a basic standard deduction of ₹75,000)”> ‘zero’ income tax for those earning up to ₹12 lakh (or ₹12.75 lakh for salaried taxpayers with a basic standard deduction of ₹75,000) under the new tax regime.

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