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Income Tax Calculator: 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 become nil. Here’s how:
Income Tax Calculator.
Income Tax Calculator: 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.
Currently, under the new tax regime, a few deductions can be claimed. These include a standard deduction of Rs 75,000, deduction under family pension of Rs 25,000, the employer’s NPS contribution of 14 per cent, and the employer’s EPF contribution of 12 per cent.
How Can Your Annual Salary Of Rs 14.65 Lakh Be Tax-Free?
According to a livemint report citing a calculation from Tax2win, 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.
“However, please note that employees must have NPS and EPF contributions included in their salary structure to avail of this tax advantage, then only this benefit till Rs 14.65 lakh can be claimed. This benefit applies only to salaried employees with structured employer contributions,” according to the livemint report citing Abhishek Soni, CEO and co-founder of Tax2win.
What Is NPS, How To Invest?
The National Pension System (NPS) is a government-backed retirement savings scheme. The scheme, which is a market-linked scheme, provides certain tax benefits under both old and new tax regime. However, under the new tax regime, only employer contribution (up to 14 per cent of basic + DA) is considered for tax deductions.
Additionally, NPS is an exempt-exempt-exempt (EEE) scheme.
Though the government employees have NPS scheme after 2001, private sector employees can start it voluntarily. Here’s a step-by-step guide to open the NPS account.
What Is EPF?
Employees’ Provident Fund (EPF) is another retirement saving scheme. Under this scheme, both employees and employers contribute 12 per cent of the employee’s basic salary. Under the new tax regime, only the employers’ share is available for tax deductions.
Comparison of Key Tax Benefits Under NPS Vs EPF
| Feature | National Pension System (NPS) | Employees’ Provident Fund (EPF) |
|---|---|---|
| Tax-Free Annual Income Limit | ₹13.7 lakh | ₹12 lakh |
| Standard Deduction | ₹75,000 | ₹75,000 |
| Employer Contribution Limit | Up to 14% of basic salary (tax-deductible) | Up to 12% of salary (tax-exempt) |
| Employee Contribution Deduction | Not deductible under the New Regime | Not deductible under the New Regime |
| Interest Rate | Market-linked returns | Fixed-rate of 8.25% |
| Management Fees | 0.09% per year | Not applicable |
| Flexibility | High (asset allocation, fund switching) | Low (fixed contributions and returns) |
| Withdrawal Taxation | Taxable on withdrawal | Exempt under certain conditions |
Income Tax Slabs for FY26
Under the new regime, the income tax slabs announced in the latest Union Budget 2025-26 are:
Income up to Rs 4,00,000: Nil
Income from Rs 4,00,001 to Rs 8,00,000: 5%
Income from Rs 8,00,001 to Rs 12,00,000: 10%
Income from Rs 12,00,001 to Rs 16,00,000: 15%
Income from Rs 16,00,001 to Rs 20,00,000: 20%
Income from Rs 20,00,000 to Rs 24,00,000: 25%
Income above Rs 24,00,000: 30%.
