Zero Income Tax on Salary CTC of up to Rs.14.65 Lakhs
Budget 2025 was presented on 1st Feb by the Finance Minister made various changes to direct taxation. Finance Minister Nirmala Sitharaman has proposed a revised tax slab under the new tax regime that intends to decrease the tax burden.
So after Budget 2025, what will be the tax applicability for salaried taxpayers with Cost to Company (CTC) of upto to Rs.14.65 Lakhs?
For salaried taxpayers, various exemptions and deductions are available that will provide major tax benefits. Because of this, salaried taxpayers have to pay Zero Income Tax.
So let say, if salaried Employee has CTC of Rs. 14.65 lakhs and salaried taxpayers can get a benefit of standard deduction, Provident Fund and NPS.
Let’s understand it in another way with an Example:
If we take an example of the above-mentioned salaried income, i.e., Rs. 14.65 Lakh [Assuming Basic salary (50% of Gross Salary) – Rs.732,500].
Exemptions and Deductions claimed: Standard deduction, EPF Employer’s Contribution and Investment in National Pension Scheme (NPS).
As per the new tax regime, the new tax rate slabs are:
Example: Total Salary CTC = Rs. 14.65 Lakh
EPF Employer’s Contribution (12% of Basic, up to 7.5 Lakh p.a.) = Rs. 87,900
Add: Sec 80CCD(2): NPS (14% of Basic + Dearness Allowance (DA), upto 7.5 lakh p.a.) = Rs. 1,02,550
Add: Standard Deduction= Rs. 75,000
Total Deduction = Rs. 2,65,450
Income from Salary = Rs. 11,99,550
Pay Zero Income Tax
Calculate tax liability
Income 4L – 8L = 4,00,000*5% = Rs. 20,000
Income 8L -12L = 399550*10% = Rs. 39,955
Total Tax Liability = Rs. 59,955
The total tax liability comes to Rs. 59,955. The tax liability becomes ‘nil’ or ‘zero’ after Income Tax Rebate.
This Example comes with Assumptions that:
- 14% of Basic Salary is invested in NPS, reducing Taxable Income.
- The Employer’s contribution to EPF (12% of the Basic Salary) is included in your CTC).
- No Other Income apart from Salary.
