Zero Tax: Imagine earning ₹15.5 lakh annually and paying ZERO income tax! While the new tax regime offers a ₹75,000 standard deduction and increased rebates, achieving zero tax at this income level requires smart structuring. Here’s how it’s legally possible for FY 2025-26:
🔑 Key Features of New Tax Regime (FY 2025-26)
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Same rates for all: General, senior, and super senior citizens
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Higher Rebate: ₹0 tax if taxable income ≤ ₹12 lakh
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Standard Deduction: ₹75,000 for salaried individuals
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Tax Slabs:
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Up to ₹4 lakh: 0%
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₹4-8 lakh: 5%
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₹8-12 lakh: 10%
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₹12-16 lakh: 15%
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💡 The Zero-Tax Strategy: Salary Structuring
Here’s a real-case breakdown for ₹15.5 lakh CTC:
| Component | Amount (₹) | Tax Status |
|---|---|---|
| Basic Pay | 7,55,000 | Taxable |
| Personal Allowance | 3,44,540 | Taxable |
| Employer PF | 50,460 | Exempt |
| Employer NPS | 1,05,700 | Exempt (up to 14% of basic) |
| Flexi Tax-Free | 2,94,300 | Exempt (HRA/LTA etc.) |
| Total CTC | 15,50,000 |
📝 Step-by-Step Tax Calculation
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Gross Salary: ₹15,50,000
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Minus Standard Deduction: -₹75,000
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Taxable Base: ₹14,75,000
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Minus Tax-Free Components:
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Employer NPS: ₹1,05,700
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Flexi Benefits: ₹2,94,300
Total Deductions: ₹4,00,000
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Final Taxable Income:
₹14,75,000 – ₹4,00,000 = ₹10,75,000
✅ Why is Tax Zero?
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Taxable income (₹10.75L) falls below ₹12 lakh threshold
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Rebate u/s 87A covers entire tax liability:
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Tax on ₹10.75L = ₹20,000 (5% of ₹4L) + ₹27,500 (10% of ₹2.75L) = ₹47,500
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Rebate allowed: ₹60,000 (covers ₹47,500)
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Net Tax Payable = ₹0
⚠️ Critical Conditions to Note
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NPS Contribution: Employer’s NPS must be ≤14% of basic pay
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Flexi Components: Must be legally exempt (e.g., HRA, LTA, medical allowance)
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No Other Income: Strategy assumes no interest/dividend income
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New Regime Only: Old regime deductions (80C, HRA) don’t apply
Also Check: Pay Zero Tax on ₹18.75 Lakh Salary: New Tax Regime Tricks (2025-26)
❓ FAQ: Zero Tax on ₹15.5 Lakh Salary
Q1: Is this legal?
A: Absolutely! It uses exemptions and rebates under the Income Tax Act.
Q2: Can senior citizens use this?
A: Yes! New regime has uniform rates for all age groups.
Q3: What if my company doesn’t offer NPS/flexi benefits?
A: Negotiate salary restructuring or use voluntary NPS (additional ₹50k u/s 80CCD(1B)).
Q4: Is ₹12 lakh taxable income the rebate limit?
A: Yes. For FY 2025-26, taxable income ≤ ₹12 lakh qualifies for full rebate.
Q5: Are FY 2024-25 slabs different?
A: Yes! Previous slabs:
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0-3L: 0%
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3-7L: 5%
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7-10L: 10%
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10-12L: 15%
Smart salary structuring + New regime benefits = Massive tax savings!
Share this with every salaried Indian! 💰✅
Pro Tip: Use employer-linked NPS for double benefit – tax-free contribution and compounding returns!
⚠️ Disclaimer: This illustration is for educational purposes. Tax outcomes depend on individual salary structures, investments, and applicable exemptions. Consult a CA before implementation. Tax laws are subject to change. The author/blog is not liable for financial decisions made based on this content.