While efforts are underway to introduce a new income tax law in the country, the government has simultaneously declared in Budget 2025 that income up to Rs 12 lakh will be exempt from taxation under the new tax regime. However, various calculations have emerged regarding this matter.
Even more than Rs 14 lakh salaried person can save tax!
In this context, salaried individuals will be pleased to learn that even if their salary package exceeds Rs 14 lakh, their tax obligation will remain nil. In employment, companies present a Cost to Company (CTC) figure to employees, which encompasses not only the salary but also expenses related to EPFO contributions, insurance, gratuity, and other benefits. This figure ultimately reflects the total salary package.
How can you save tax?
Assuming your CTC is slightly above Rs 14 lakh, approximately Rs 14.65 lakh, the company’s contribution of 12 percent to the EPFO would amount to around Rs 87,900, which is tax-exempt. Additionally, if your employer provides a contribution to the National Pension System (NPS), this would be 14 percent of your basic salary, resulting in an annual tax-free income of Rs 1.02 lakh.
Salaried class will benefit from a standard deduction of Rs 75,000
Furthermore, the salaried class will benefit from a standard deduction of Rs 75,000. After accounting for these deductions and claims, your taxable income would be Rs 11.99 lakh. Consequently, you would qualify for a tax rebate under Section 87A of the Income Tax Act, resulting in a zero tax liability.
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