It’s ₹12 Lakhs? No Need to Pay Tax up to ₹13.7 Lakhs: Budget Bonanza

Union Budget 2025 has provided the biggest relief for taxpayers as they don’t have to pay any tax up to the annual income of ₹12 lakhs for those opting for the new tax regime. The tax rebate limit under Section 87A has been increased from ₹7 lakhs to ₹12 lakhs. For salaried individuals, the no-tax benefit will extend up to ₹12.75 lakhs after applying the standard deduction of ₹75,000.

But do you know that salaried individuals can save the tax up to an income of ₹13.7 lakhs in the proposed new tax regime, and it’s not just till ₹12.75 lakhs? Curious, let’s find out how you can save tax up to ₹13.7 lakhs in this blog.

NPS: A Deduction to Save Tax on the Income of ₹13.7 Lakhs

There are two major deductions that can help you pay zero tax on a salary earnings of ₹13.7 lakhs:

1. Standard Deduction: ₹75,000 which reduces the taxable income.
2. NPS (National Pension Scheme) under Section 80CCD(2): Up to 14% of an employee’s basic salary which is invested in NPS is tax deductible. It can be availed only if the employer/company offers this NPS benefit, and it means that employees cannot avail it on their own.

Example – Mr. A works in an IT company and his annual salary package is ₹13.7 lakhs. Suppose his basic salary is 50% of the total salary package which is ₹6.85 lakhs. If his company gives the NPS benefit, then he can invest 14% of his basic salary in the NPS which turns out to be ₹95,900.

Particulars	Calculation
Annual Salary	₹13,70,000
Basic Salary (50% of Total Annual Salary)	₹6,85,000
NPS Contribution (14% of Basic Salary)	₹95,900

Calculation of Zero Tax up to ₹13.7 Lakhs

Here is the detailed calculation of how you can pay zero taxes if your annual salary package is ₹13.7 lakhs:

Mr. A – Tax Liability	Calculation in Proposed New Regime
Annual Salary Income	₹13,70,000
Standard Deduction	(₹75,000)
NPS Contribution	(₹95,900)
Taxable Income	₹11,99,100
Tax Amount (Nil @ ₹4,00,000 + 5% @ ₹4,00,000 + 10% @ ₹3,99,100)	₹59,910
Tax Rebate under Section 87A (Raised from ₹25,000 to ₹60,000)	(₹60,000)
Final Tax Liability	Nil

How Much Tax You Need to Pay on Different Income Levels?

Even after the basic tax rebate limit of ₹12 lakhs, you can save lakhs of rupees in tax liability at higher incomes after availing the benefit of the standard deduction and NPS contribution. This table clearly shows how much tax you need to pay at different annual income levels.

Annual Income (₹)	Basic Salary (50% of Annual Income)	Standard Deduction (₹)	NPS Contribution (14% of Basic Salary)	Taxable Income (Annual Income – SD – NPS)	Final Tax Liability (₹)
₹16,00,000	₹8,00,000	(₹75,000)	(₹1,12,000)	₹14,13,000	₹91,950
₹20,00,000	₹10,00,000	(₹75,000)	(₹1,40,000)	₹17,85,000	₹1,57,000
₹24,00,000	₹12,00,000	(₹75,000)	(₹1,68,000)	₹21,57,000	₹2,39,250
₹30,00,000	₹15,00,000	(₹75,000)	(₹2,10,000)	₹27,15,000	₹3,78,750
₹32,00,000	₹16,00,000	(₹75,000)	(₹2,24,000)	₹29,01,000	₹4,50,300
₹48,00,000	₹24,00,000	(₹75,000)	(₹3,36,000)	₹43,89,000	₹8,96,700
₹50,00,000	₹25,00,000	(₹75,000)	(₹3,50,000)	₹45,75,000	₹9,52,500

Conclusion

While NPS helps you directly save taxes, it provides several advantages such as selection of asset mix (equity or debt), flexibility in switching plans, and lower fund management charges. With the latest amendments in the new tax regime, salaried taxpayers stand to directly benefit from higher disposable income, spending, and investment. So, open Demat Account with SMC Global Securities and start investing to grow your wealth.

Reference:
https://www.business-standard.com/finance/personal-finance/tax-saving-tips-how-you-can-legally-pay-zero-tax-on-rs-13-7-lakh-salary-125020300192_1.html

Author: All Content is verified by SMC Global Securities.