How to Obtain Zero Tax on 13.7 Lakh Salary? Get to Know Here
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Summary: NPS and deductions can exempt you from paying tax for an annual income of 13.7 lakh.
Salaried taxpayers who earn up to Rs 12.75 lakh per year are excused from paying tax under the new regime, which includes a standard deduction of Rs 75,000. But what if your annual salary is Rs 13 lakh or higher? You could still end up paying no taxes.
The tax-free threshold is now Rs 12 lakh instead of Rs 7 lakh. Likewise, salaried taxpayers making up to Rs 12.75 lakh a year are exempt from paying any taxes due to a standard deduction of Rs 75,000.
Investments in the national pension program (NPS) are eligible for deductions under the new tax regime. A deduction of up to 14 percent from an employer's National Pension Scheme (NPS) payment is permitted under Section 80CCD(2).
The taxpayer's NPS contribution, however, is only deductible under the previous scheme and is non-deductible under the current one.
For an example, a 50% basic salary of Rs 6.75 lakh, an NPS contribution of Rs 94,500 (at 14%), and a standard deduction of Rs 75,000, the taxable income for an annual income of Rs 13.5 lakh drops to Rs 11.8 lakh, meaning that under the new regime, there is no tax.
Right now, very few companies have embraced the NPS advantage for its employers. In reality, many employees are discouraged from registering in NPS due to the long lock-in period and the 60% partial withdrawal on maturity regulation.
