New Tax Regime: Whenever we used to think of tax savings, we only remembered the Old Tax Regime, in which tax exemption was taken by claiming HRA, LTA, 80C.
But now the government has made the New Tax Regime more friendly. Especially from FY 2025–26, this regime will suit most taxpayers more.
With the changed slab rates, standard deduction and now the salary structuring facility being provided by the companies, it is possible to pay ZERO tax even on a salary of up to ₹ 19,20,000. How? Let us now understand in detail.
How will ZERO TAX be implemented?
From FY 2025–26, the slabs of the New Tax Regime have been changed and along with that companies are now making the salary structure tax friendly.
The result is that even if your annual salary is up to ₹19.20 lakh, you can pay ZERO TAX by making sensible deductions and structuring.
New Tax Regime- FY 2025–26 Slabs
| Taxable Income (in ₹) | Tax Rate (%) |
|---|---|
| 0 – 4,00,000 | NIL |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| > 24,00,000 | 30% |
Keep in mind that on taxable income up to ₹12 lakh, a tax exemption of ₹25,000 is available under Section 87A, i.e. tax = ₹0
Real salary breakup of ₹19.20 lakh CTC
Suppose your company structures salaries like this.
| Component | Amount (₹) | Calculation Basis |
|---|---|---|
| Basic Pay | ₹9,60,000 | 50% |
| Personal Allowance | ₹4,72,320 | Fixed component (excluding flexi parts) |
| Employer PF (Flat)** | ₹21,600 | ₹1,800 × 12 (fixed min opted) |
| Gratuity | ₹46,080 | 4.8% of basic = ₹9.6L × 4.8% |
| Variable Pay (5%) | ₹96,000 | 5% of ₹19,20,000 |
| Flexi/MPMC Components | ₹6,23,600 | Books, cars, entertainment etc. |
| Total CTC | ₹19,20,000 |
Step-by-step calculation of taxable income
