How To Reduce Tax To Zero On ₹15 Lakh Salary Under New Tax Regime With Detailed Calculations

Many salaried professionals often scramble to find ways to lower their tax liability as the income tax return deadline draws near. However, with careful financial planning and strategic use of deductions and exemptions, it is possible to bring taxable income down to nil, even with an annual salary of ₹15 lakh. According to experts, this requires making timely investments, leveraging employer contributions, and taking advantage of allowances permitted under the Income Tax Act for the financial year 2025–26.

Understanding The New Tax Regime Slabs

For FY 2025–26, the new tax regime offers revised slabs aimed at providing relief to middle and upper-middle-income earners. Under this structure, income up to ₹4 lakh is completely tax-free, while higher slabs are taxed at progressive rates, reaching up to 30 per cent for incomes above ₹24 lakh. The key to paying no tax on a ₹15 lakh salary lies in systematically applying available deductions across multiple components of income.

Claiming The Standard Deduction

Salaried taxpayers under the new regime can claim a standard deduction of ₹75,000. This is a flat reduction from gross salary, which lowers taxable income immediately without the need for any additional documentation. For someone earning ₹15 lakh annually, this deduction alone reduces taxable income to ₹14.25 lakh.

Leveraging Employer Contributions To NPS

The National Pension System (NPS) is a government-backed retirement savings plan that also offers significant tax advantages. Under the new rules, employer contributions to an employee’s NPS account—up to 14 per cent of the basic salary—are eligible for deduction. For a basic pay of ₹7.5 lakh (half of the total salary), this can amount to ₹1.05 lakh in tax benefits, reducing taxable income further to ₹13.20 lakh.

Taking Advantage Of EPF Contributions

Employer contributions to the Employees’ Provident Fund (EPF) can also be deducted from taxable income. The maximum eligible contribution is 12 per cent of basic salary, which translates to ₹90,000 for a basic pay of ₹7.5 lakh. This brings down the taxable income to ₹12.30 lakh, bringing it closer to the lower tax bracket threshold.

Additional Benefits From Small Savings Schemes

According to experts, combining multiple small savings instruments can further reduce taxable income. Investments in schemes such as the Public Provident Fund (PPF) or the Sukanya Samriddhi Yojana can yield both financial growth and tax relief. For example, allocating ₹1.5 lakh to PPF and ₹1 lakh to Sukanya Samriddhi can generate an additional deduction worth ₹17,500 in tax savings, bringing taxable income to ₹12.12 lakh.

Using Allowances For Official Expenses

Reimbursements for specific work-related expenses can also help reduce taxable income, provided they are part of the salary structure and supported by bills. Allowances for entertainment, transportation, fuel, mobile usage, and uniforms are eligible for tax benefits if they are genuinely incurred for professional purposes. By claiming up to ₹1.5 lakh under these categories—such as ₹40,000 for entertainment, ₹60,000 for transport, ₹25,000 for fuel, ₹10,000 for mobile bills, and ₹15,000 for uniforms—taxable income can be reduced to ₹10.62 lakh.

Achieving Zero Tax Liability

Once the taxable income is lowered to ₹10.62 lakh, it comfortably falls below the ₹12 lakh mark in the new regime’s tax-free bracket. This means that with correct planning and documentation, a salaried professional earning ₹15 lakh annually can legally end up paying no income tax for FY 2025–26.

Why Planning Ahead Matters

Experts emphasise that waiting until the last quarter to begin tax-saving investments can limit the available options and lead to rushed decisions. A well-thought-out annual investment plan ensures that deductions are maximised, employer contributions are optimised, and benefits under the Income Tax Act are fully utilised.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should consult a qualified financial advisor or tax expert before making any investment or tax-related decisions.