New Tax Regime: Salary up to ₹ 14.65 lakh will be tax free in the new tax regime? understand the complete calculation
Can tax be zero even on a salary of Rs 14.65 lakh? In the new tax rules, you can save the entire tax with just three exemptions. Know what these exemptions are and how your taxable income will decrease.
New Tax Regime: Income Tax Department has notified all the Income Tax Return (ITR) forms for the assessment year 2025-26. The process of filing ITR is also expected to start soon. The salaried class is also planning to reduce tax liability. However, if your annual CTC is ₹ 14.65 lakh, then you can reduce your tax liability to zero without much brainstorming.
How will the tax liability be zero?
According to Taxbuddy, suppose the CTC of an employee is Rs 14.65 lakh. Out of this, 50% is the basic salary and the remaining 50% is divided into different allowances and other items. The tax deduction is calculated on the basis of basic salary. The breakup of deductions in this is as follows:
Exemption on EPF contribution: If the company deposits 12% of the basic salary in the Employees Provident Fund (EPF), then this amount comes under the purview of tax exemption. This amount will be Rs 87,900.
Exemption on company contribution to NPS: The company’s 14% contribution to NPS is also considered tax free, under section 80CCD (2). This amount is ₹ 1,02,550.
Standard deduction: In the new tax regime, a standard deduction of ₹ 75,000 is available to all salaried persons. That is, this amount will be directly reduced from your tax liability.
After combining all these deductions, the taxable income of the employee comes down to ₹ 11,99,550. Since, Finance Minister Nirmala Sitharaman has made income up to Rs 12 lakh tax free in Budget 2025, there will be no income tax liability on this employee.
It is worth noting here that the new tax system allows deduction on company’s NPS contribution under section 80CCD(2). Whereas EPS i.e. Employee Pension Scheme also comes under the purview of tax exemption under 80CCD(1). However, you will not get tax exemption on your contribution.
What would have been the liability in the absence of tax exemptions?
If all these exemptions were not applicable, the total income tax liability on a salary of Rs 14.65 lakh would have been up to ₹88,500 as per the new tax regime. Let us also understand the calculation of this tax calculation:
5% on income of ₹4–8 lakh = ₹20,000 tax
10% on income of ₹8–12 lakh = ₹40,000 tax
15% on income of ₹12–14.65 lakh = ₹28,500 tax (after standard deduction)
The post New Tax Regime: Salary up to ₹ 14.65 lakh will be tax free in the new tax regime? understand the complete calculation first appeared on informalnewz.
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