Not only ₹12 lakh… There is no tax at all even on earnings up to ₹13.7 lakh, see the full calculation
Tax Deduction in New Regime: Finance Minister of India presented the Union Budget 2025 on Feb 1. The budget has given a good news to the middle class. The government has announced that no tax will be paid on income up to Rs 12 lakh. Income above Rs 12 lakh per annum will have to pay tax as per the slab. However, by doing tax planning, you can also save tax on earnings of more than 12 lakhs. Sometimes there may be a zero tax on your salary. Even if your annual salary is Rs 13.7 lakh, you can avoid paying any tax by following a few steps.
According to tax experts, one has to invest in the National Pension System (NPS) and impose zero tax on income up to Rs 13.7 lakh per annum. In the new tax regime, NPS contributions up to 14 per cent of the basic salary (plus DA) are subject to tax deduction. However, this reduction is realised only if the employer/company allows the employee to invest in NPS.
Tax will be saved in this way on an annual salary of 13.7 lakhs
Assume that the annual salary of an employee is Rs 13.7 lakh. In this, 50 per cent basic salary is Rs 6.85 lakh, then the NPS contribution at 14 per cent will be Rs 95,900. The employee can claim a tax deduction of Rs 95,900 per annum in NPS. If a standard deduction of Rs 75,000 is added to this amount, this total deduction will be Rs 1.70 lakh. This way he will not have to pay any tax.
NPS started in 2004.
Let me tell you that if you also want to take a big pension after your retirement, then the National Pension System can be a good option for you. NPS is a govt scheme, which is linked to the market. NPS was launched by the govt in 2004. It was opened to the public in 2009.
