Revised New Tax Regime: How you can pay 0 income tax on Rs 14.78 lakh annual income; see expert calculations
Revised New Tax Regime: In Budget 2025, Finance Minister Nirmala Sitharaman announced revised interest rate slabs for the new tax regime. A non-salaried individual doesn't need to pay tax on an annual income up to Rs 12 lakh, while a salaried individual doesn't need to pay tax on an annual income up to Rs 12.75 lakh. But one can pay 0 income tax on income much more than that if they contribute to certain schemes and have allowances in their salary.
Revised New Tax Regime, How to Pay 0 Tax: In Budget 2025, the major announcement for crores of taxpayers in India was that an annual income up to Rs 12 lakh for non-salaried individuals and an annual income up to Rs 12.75 lakh for salaried individuals are tax-free. However, there are various ways through which you can save 100 per cent tax. Some of the ways are to contribute to tax-saving schemes or incorporate allowances in your salary that can help you get a full tax relaxation. Here, we tell you about the main changes that the tax regime has gone through, and, through expert calculation, know how you can pay 0 income tax if your annual income is Rs 14,77,500.
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What are changes in new tax regime?
The main change in the new tax regime is that non-salaried individuals with up to Rs 12 lakh income and salaried individuals with up to Rs 12.75 lakh income a year need to pay 0 tax. The other changes are tax slabs. In the existing system, the 20 per cent tax slab started from Rs 12 lakh. Now it will start from Rs 16 lakh. The 25 per cent tax slab is newly introduced in the proposed slab changes. The 30 per cent tax slab starts from Rs 15 lakh, but in the proposed system, it will start from Rs 24 lakh.
Proposed new tax regime slabs
| Proposed Tax Regime | |
| Income Tax Slabs | Tax Rate |
| Upto Rs. 4,00,000 | NIL |
| Rs. 4,00,001 - Rs. 8,00,000 | 5% |
| Rs. 8,00,001 - Rs. 12,00,000 | 10% |
| Rs. 12,00,001 - Rs. 16,00,000 | 15% |
| Rs. 16,00,001 - Rs. 20,00,000 | 20% |
| Rs. 20,00,001 - Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
Existing new tax regime slabs
| Existing tax regime | |
| Tax Slab for FY 2024-25 | Tax Rate |
| Up to Rs 3 lakh | NIL |
| Rs 3 lakh - Rs 7 lakh | 5% |
| Rs 7 lakh - Rs 10 lakh | 10% |
| Rs 10 lakh - Rs 12 lakh | 15% |
| Rs 12 lakh - Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
When will proposed tax slab changes be implemented?
The proposed slab changes will be implemented from Financial Year 2025-26. For this financial year, the existing new tax regime will be in place, and taxpayers need to file their ITR under that only.
What are other ways to reduce tax?
Though the old tax regime was more inclined towards deductions, taxpayers can also find some of them in the proposed tax regime. E.g., taxpayers can get tax benefits on National Pension System (NPS) contributions. They can include reimbursement-related expenses like conveyance allowance and mobile phone expenses to get tax benefits.
How to pay 0 tax on Rs 14.77 lakh annual income?
Aastha Dhowan, Partner, N.A. Shah Associates, tells us that by contributing to NPS and having reimbursements such as travelling allowance for travelling between office and home and mobile phone allowance in their salary structure, how you can make your tax liability 0 on an annual income of Rs 14,77,500 lakh.
What will be salary structure then?
To make the tax 0, the NPS contribution of a person earning Rs 14.77,500 should be Rs 1,78,500. Under -u/s 80CCD(2), this contribution will be tax-free.
Conveyance for travelling between office and home
The conveyance between travelling to the office and home should be Rs 12,000.
Mobile phone reimbursement
The annual mobile phone reimbursement should also be Rs 12,000.
Standard deduction
The standard deduction on this income will be Rs 75,000.
Other deductions
If we add travel and mobile reimbursements, the total amount will be Rs 24,000.
Total income after deductions
After all deductions, the remaining income will be Rs 12,00,000.
Tax on above income
The tax on this income will be Rs 60,000. But you don't have to pay that. Know why?
Rebate u/s 87A
It's because under u/s 87A, you will get a rebate of Rs 60,000. The rebate will make the tax liability 0.
It means that the taxpayer doesn't have to pay any income tax on an income of Rs 14,77,500.
Salary structure chart for 0 income tax
| Particulars | Amount |
| Basic | 12,75,000 |
| Employers contribution to NPS | 1,78,500 |
| Conveyance for travelling between office and home | 12,000 |
| Mobile phone reimbursement | 12,000 |
| GROSS SALARY | 14,77,500 |
| less: Deductions/ Exemptions | |
| -Standard deduction | -75,000 |
| -Reimbursement of telephone expenses (*) | -12,000 |
| -Reimbursement of conveyance to and fro (office and home) (*) | -12,000 |
| NET SALARY | 13,78,500 |
| Less: Chapter VI-A Deductions | |
| -u/s 80CCD(2) | -1,78,500 |
| TOTAL INCOME | 12,00,000 |
| Tax on above | 60,000 |
| Less: Rebate u/s 87A | 60,000 |
| Tax Payable | - |
| (*) Subject to submission of proof of incurrance of expenses |