New Tax System: While presenting her eighth budget, Nirmala Sitharaman had announced an increase in the personal income tax limit. Now taxpayers will not have to pay any tax on income up to Rs 12 lakh under the new tax system, whereas earlier this limit was Rs 7 lakh.
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Income tax slabs 2025-26: On February 1, Union Finance Minister Nirmala Sitharaman gave a big relief on the income tax front up to Rs 12 lakh. During this time, income up to Rs 12 lakh has been made tax free under the new tax regime. However, by adopting some smart methods, you can pay zero income tax even with an income of ₹ 14.65 lakh.
How will you save money?
Tax2Win CEO and co-founder Abhishek Soni explains how salaried employees with a cost to company (CTC) of Rs 14.65 lakh can pay zero tax under the new income tax system. He has tried to explain it through an example.
Understand with an example
Annual Income (CTC): Rs 14,65,000
Basic Salary (50% of CTC): Rs 7,32,500
NPS Employer Contribution (14% of Basic): Rs 1,02,550
EPF Employer Contribution (12% of Basic): Rs 87,900
Standard Deduction: Rs 75,000
Taxable Income (after deductions): Rs 11,99,550 lakh
With these deductions, your taxable income falls below ₹12 lakh, making you eligible for zero tax under the new system. However, to avail this, employees will have to include NPS and EPF contributions in their salary structure.
A big announcement was made in the budget
Let us tell you that while presenting her eighth budget, Nirmala Sitharaman had announced an increase in the personal income tax limit. Now taxpayers will not have to pay any tax on income up to Rs 12 lakh under the new tax system, whereas earlier this limit was Rs 7 lakh. The increase of Rs 5 lakh in the exemption limit is the biggest increase so far and it is equal to all the tax reliefs given between 2005 and 2023.
Changes in slabs too
Under the new tax slab, if the income is more than Rs 12 lakh, then that person will be exempted on the initial income of up to Rs four lakh. Five percent tax will be levied on income earned between Rs four to eight lakh, 10 percent on Rs 8-12 lakh, 15 percent on Rs 12-16 lakh, 20 percent on income from Rs 16 to 20 lakh, 25 percent on Rs 20-24 lakh and 30 percent income tax will be levied on income above Rs 24 lakh.
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