Producer: Priyanka Das | Editor: Sujata Singh February 20, 2025
The government has exempted an annual income up to Rs 12 lakh from income tax through a rebate in the Budget 2025-26, which will become effective from April 1, thus giving huge relief to taxpayers.
This Rs 12 lakh limit can be extended further if other income tax provisions are used properly.
According to a calculation, if you have a total cost-to-company (CTC) of Rs 14.65 lakh annually and you avail of provisions like NPS and EPF contributions, your tax liability will also be nil.
Salaried employees with a CTC of Rs 14.65 lakh can pay zero tax. Here’s how.
Annual Salary or CTC: Rs 14,65,000 Basic Pay (50 per cent of CTC): Rs 7,32,500 Standard Deduction: Rs 75,000 Employer’s EPF Contribution (12% of Basic Pay): Rs 87,900 Employer’s NPS Contribution (14% of Basic Pay): Rs 1,02,550 Taxable Income (after adjusting deductions): Rs 11,99,550
Since this Rs 11,99,550 is below the Rs 12 lakh rebate limit, your income tax liability will be zero in this case.
Both the National Pension System (NPS) and the Employees’ Provident Fund (EPF) are government-backed retirement savings schemes.