The new tax regime, which will be applicable from April 1, 2025, brings good news for salaried individuals. Under this regime, income up to Rs 12 lakh per financial year is tax-free. But did you know that with proper planning and by utilizing certain allowances and contributions, you can make your annual income of up to Rs 15.60 lakh completely tax-free? Let’s dive into the details and see how this is possible.
In the proposed new tax regime, income up to Rs 12 lakh is tax-free. For salaried individuals, this limit can stretch to Rs 12.75 lakh. However, by taking advantage of reimbursements and the National Pension System (NPS), you can further increase this limit to Rs 15.60 lakh. This means even if your annual income is Rs 15.60 lakh, you can reduce your taxable income to zero. Sounds interesting, right? Let’s break it down.
By adding up all these reimbursements, you can save up to Rs 1,78,000 in taxes.
Total Deductions: Rs 3,62,200
If your annual income is Rs 15,60,000, subtracting these deductions brings your taxable income down to Rs 11,97,800. Since income up to Rs 12 lakh is tax-free under the new regime, your entire salary of Rs 15.60 lakh effectively becomes tax-free!
By strategically planning your salary structure and leveraging these benefits, you can make your income of Rs 15.60 lakh completely tax-free under the new tax regime. Start optimizing your finances today and enjoy the benefits of smart tax planning!
In the proposed new tax regime, income up to Rs 12 lakh is tax-free. For salaried individuals, this limit can stretch to Rs 12.75 lakh. However, by taking advantage of reimbursements and the National Pension System (NPS), you can further increase this limit to Rs 15.60 lakh. This means even if your annual income is Rs 15.60 lakh, you can reduce your taxable income to zero. Sounds interesting, right? Let’s break it down.
How Reimbursements Help Save Tax
Many companies offer reimbursements for expenses related to official purposes. These reimbursements are not considered part of your taxable income, which means they can help you save a significant amount in taxes. Here’s how you can make the most of them:- Travel Reimbursement: If your company provides a travel allowance, you can claim around Rs 8,000–10,000 per month. This adds up to Rs 1 lakh annually, which is non-taxable.
- Mobile/Internet Bills: If you use your mobile or internet for official work, you can get reimbursed up to Rs 1,000 per month, saving you Rs 12,000 annually.
- Food/Entertainment Bills: Many companies allow reimbursement for food and entertainment expenses. If you claim Rs 3,000 per month, you can save Rs 36,000 annually.
- Book/Stationery/Fuel Bills: If you use books, stationery, or fuel for official purposes, you can claim around Rs 2,500 per month, saving Rs 30,000 annually.
By adding up all these reimbursements, you can save up to Rs 1,78,000 in taxes.
NPS Tax Benefit: Another Way to Save
The National Pension System (NPS) is another great way to reduce your taxable income. Under the new tax regime, you can avail of tax benefits on your employer’s contribution to NPS. For example, if your basic salary is Rs 7,80,000, your employer can contribute up to 14% of this amount to NPS. This means you can save Rs 1,09,200 in taxes through NPS alone.Don’t Forget the Standard Deduction
As a salaried individual, you are also eligible for a standard deduction of Rs 75,000. This deduction further reduces your taxable income, making it easier to stay within the tax-free limit.Putting It All Together
Now, let’s see how all these benefits add up.- Reimbursements: Rs 1,78,000
- NPS Contribution: Rs 1,09,200
- Standard Deduction: Rs 75,000
Total Deductions: Rs 3,62,200
If your annual income is Rs 15,60,000, subtracting these deductions brings your taxable income down to Rs 11,97,800. Since income up to Rs 12 lakh is tax-free under the new regime, your entire salary of Rs 15.60 lakh effectively becomes tax-free!
Conclusion
Use reimbursements for travel, mobile bills, food, and other official expenses to save up to Rs 1,78,000. Take advantage of the NPS tax benefit, which can save you up to Rs 1,09,200. Don’t forget the standard deduction of Rs 75,000.By strategically planning your salary structure and leveraging these benefits, you can make your income of Rs 15.60 lakh completely tax-free under the new tax regime. Start optimizing your finances today and enjoy the benefits of smart tax planning!
Disclaimer: This blog is for informational purposes only and does not constitute professional financial or tax advice. Tax laws may change, and calculations are based on the proposed new tax regime (effective April 1, 2025). Consult a tax advisor for personalized guidance. The author is not responsible for any decisions made based on this content.