No Earnings Tax On Rs 17 Lakh Profits If You Do This...
Income Tax Calculator: The Union price range 2025-26 has made an annual income up to Rs 12 lakh tax-free. However, this profit restriction may be raised to Rs 17 lakh via availing of sure allowances if your agency makes changes in your revenue shape.
As per the Income Tax Act, certain allowances are exempt from earnings tax in the new tax regime if positive situations are met. These allowances may additionally help taxpayers reduce their tax legal responsibility. Check how your annual earnings, or CTC, of nearly Rs 17 lakh may grow to be tax-loose in FY26 if you rejig your salary structure:
"Underneath the new tax regime, there are sure allowances inside the Income Tax Act that could help taxpayers to rejig their revenue shape. These allowances are exempt from tax inside the new tax regime if certain situations are met. These allowances can help taxpayers to lessen taxable profits underneath the new tax regime," said Harsh Bhuta, associate of tax consulting firm Bhuta Shah & Co., in step with an economic Times report.
The subsequent are a few reimbursements and allowances to prevent taxes.
Allowances and Reimbursements that can be Exempt from Profits Tax under the New Regime
Phone & mobile bills: A salaried employee should declare an exemption on the telephone and cellular payments that she or he paid. There's no restriction for that. The ET file stated yogesh Kale, govt director of tax consulting company Nangia Andersen LLP, as pronouncing, "There may be no limit prescribed concerning the exemption of phone and internet bills below either of the tax regimes. But, as an excellent practice, the repayment amount must be affordable, considering an employee's designation and the roles and obligations."
So, if employees tweak their revenue structure to include telephone, cellular, and internet payments, the circuit will help them reduce tax legal responsibility.
Transport allowance For precise personnel, there's a provision of tax-exempt shipping allowance for mainly abled people below the Income Tax Act. This is an allowance for visiting from home to work location and vice versa. The ET file quoted Bhuta as pronouncing, "The transport allowance acquired by way of, in particular, able employees is exempted as much as Rs 3,200 in line with month or Rs 38,400 in step with annum. The simplest ones in particular—abled personnel are exempted if they're blind/deaf/dumb or orthopedically handicapped with a disability of the lower extremities."
Conveyance repayment: The conveyance compensation is a facility supplied by using employers to the employees for performing their activity. That is one of a kind from transport allowance; this is available for specially-abled personnel. The ET file quoted Bhuta as announcing, "The conveyance compensation acquired by an employee is exempt if the identical is expended even as commuting to the place of work. An employee is needed to publish payments to say reimbursement."
Automobile rent policy Of the company: below the auto lease coverage, a few employers provide an automobile to personnel for non-public and respectable use. Even though that is considered a perquisite under the profits tax, its fee could be very low.
"The perquisite fee of an automobile given through the organization for the employee's non-public and legitimate use, as in line with the profits tax policies, may be very low. The valuation mechanism stays the same under the antique and new regimes. The taxable value of such a perquisite is Rs 1,800 in step with the month if the engine's cubic capacity does not exceed 1.6 liters. A quantity of Rs 2,400 in line with the month might be taxable if the engine's cubic capacity exceeds 1.6 liters," Kale said, in step with the ET file.
If the chauffeur is also supplied, an extra Rs 900 consistent with the month is added to the cost of the perquisite, he added.
Components every year (fundamental salary @ 30% of CTC) (in Rs) every year (simple income @ 40% of CTC) (in Rs)
Primary 5, 17, 315, 7, 13, 992
Hra 258,658, 356,996
Unique allowance 4, 99,027 2,04,011
Cellular repayment 50,000 50,000
Conveyance repayment 240,000 240,000
Business enterprise's NPS Contribution seventy-two,424 99,959
Gross Pay: 16,374.24, 16,649.59
Corporation's EPF Contribution 62,078 85,679
Gratuity: 24,883, 34,343
Overall CTC 17,24,385 17,eighty four,981
These are the two cases—one with a primary income of 30 in step with the cent of CTC and some others with a simple revenue of 40 consistent with the cent. For this, the profit shape has to consist of cell repayment, transport reimbursements, conveyance reimbursement, NPS investments, and EPF investments.
Presently, under the brand-new tax regime, a few deductions can be claimed. Those encompass a standard deduction of Rs 75,000, a deduction under own family pension of Rs 25,000, the organization's NPS contribution of 14 percent, and the organization's EPF contribution of 12 percent.
Your tax calculation as per this income structure:
Details amount (@30%) amount (@forty%)
Gross pay sixteen,37,424 sixteen,64,959
Much less: mobile repayment 50,000 50,000
Less: conveyance repayment 240,000 2, 40,000
Internet pay thirteen, 47,424, 13, 74, 959
Less: fashionable deduction 75,000 75,000
Internet taxable profits 12,72,424 12,99,959
Less: business enterprise's nps contribution 72,424 99, 959
Internet taxable income 1,200,000 1,200,000
Now, whilst the annual income earnings up to Rs 12 lakh are tax-unfastened in FY26, your complete profits of sixteen,64,959 might turn out to be tax-free if you follow such a tax structure.
Income Tax Slabs for FY26
Under the new regime, the profit tax slabs announced within the modern-day Union budget 2025-26 are:
Earnings up to Rs 400,000: Nil
Profits from Rs 400,001 to Rs 800,000: five%
Profits from Rs 800,001 to Rs 1,200,000: 10%
Earnings from Rs 1,200,001 to Rs 1,600,000: 15%
Income from Rs 16,00,001 to Rs 20,00,000: 20%
Earnings from Rs 2,000,000 to Rs 2,400,000: 25%
Income above Rs 2,400,000: 30%.
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