Revised New Tax Slabs: Can you pay 0 income tax on Rs 15.25 lakh annual salary? See calculations to know

What are existing new tax regime income tax slabs?

Let's start with the existing new tax regime slabs. Have a look at different slabs and the percentage of tax you need to pay on your income.

What are proposed new tax regime income tax slabs?

Now, here are the proposed new tax regime income tax slabs where a slab of 25% has been introduced. The 30 per cent slab will start from Rs 24 lakh now. The attraction is the tax-free income of up to Rs 12.75 lakh for the salaried class. 

How much tax one will pay on Rs 15.25 lakh income?

For the salaried class individual, the estimated tax will be Rs 1,01,400, and the estimated tax for the non-salaried individual will be Rs 1,13,100. 

Why non-salaried individual is paying more tax?

Tax slab rates are the same for salaried and non-salaried individuals, but salaried individuals get a standard deduction of Rs 75,000, which non-salaried individuals won't get. 

How to pay 0 tax on Rs 15.25 lakh annual income?

Salaried individuals need to show deductions and investments of at least Rs 2.25 lakh to keep their taxable income at Rs 12.75 lakh, which will become tax-free.

What can be done?

One can claims deductions for investments in schemes such as National Pension System. They can get included travel, mobile, leave travel allowance (LTA), internet and food reimbursements in their salary structure after speaking to the HR manager of their company. Let's see how these can help make your income tax-free.

NPS contribution

Employees in the new tax regime can get tax relaxation on up to 14 per cent NPS contribution of their basic salary. On a Rs 15.25 lakh salary, if the basic salary is Rs 7.50 lakh, NPS tax benefits can be up to Rs 1,06,750. We assume you take Rs 1 lakh benefits under it.

NPS contribution under Section 80CCD

A salaried class can also get an extra benefit of Rs 50,000 on their NPS contribution under Section 80CCD of the Income Tax Act, 1961. Adding this to Rs 1 lakh, the entire amount can be Rs 1.50 lakh.

Reimbursements

Reimbursement is the second part that can help make your salary tax-free. You can get travel expenses included in your salary and claim it monthly from your office. On a Rs 15.25 lakh salary, you may get Rs 25,000 yearly as a travel expense from your office.

Mobile expense

Since you may need to use the internet or make mobile calls for official purposes, the office can give you reimbursement of these bills. On a Rs 15.25 lakh salary, such a claim can be Rs 1,000 a month or Rs 12,000 a year.

Food/entertainment bills

Your office can also reimburse your food bills. On a Rs 15 lakh salary, food bills up to Rs 2,250 a month can easily be claimed.  

Uniform/fuel/book bills

These reimbursements can also be included in your salary. You may claim up to Rs 3,000 a month, or Rs 36,000 a year on them.

 

Total amount saved through NPS contribution and reimbursements

Amount saved from NPS= Rs 1,50,000
Amount saved from reimbursements= Yearly travel allowance+yearly mobile bills, yearly food/entertainment bills+yeayly uniform/fuel/book bills
= Rs 25,000+Rs 12,000+ 27,000+36,000= 1,00,000
Total Amount saved= Rs 1,50,000+Rs 1,00,000= Rs 2,50,000

 

Taxable income

Rs 15,25,000-Rs 2,50,000= Rs 12,75,000
After a standard deduction of Rs 75,000, the income will be Rs 12,00,000, on which you don't have to pay any tax.