New tax system calculation for fiscal year 2526: How to make your salary of Rs 1.5 lakh, Rs 1.7 lakh and Rs 1.9 lakh

Income tax calculation, ITR application 2526: In the new tax system, the tax board has been heavily revised. These tablets will apply to revenue for fiscal year 2025-26. The tablets that came into effect on April 1, 2025 replace the tablets that will be applicable to the fiscal year 2024-25. With the revised board, income of up to Rs 12,00,000 will be tax-free for non-sellers. For salaried individuals, the tax exemption limit is higher than Rs 75,000 due to the standard deduction. However, the new tax system provides many deductions that are tax-free even if it is above Rs 12,75,000. Here we describe the way you earn Rs 1.5 lakh, Rs 1.7 lakh and Rs 1.9 lakh are tax-free.

Income Tax Tablet for the New Tax System

Until Rs 4 lakh, income is subject to zero tax.

The 5% tax applies to income from Rs 4,00,001 to Rs 8,00,000.

Taxpayers will pay Rs 8,00,001 to Rs 10% of Rs 12,00,000.

The tax on income is 15% between Rs 12,00,001 and Rs 16,00,000.

The tax on income is 20% between Rs 16,00,001 and Rs 20,00,000.

The tax rate is 25%, applicable to taxpayers Rs 20,00,00 to Rs 24,00,000.

The maximum tax limit is 30% of annual income exceeding Rs 24,00,000.

Tax-free income of Rs 1.2 lakh

You can see that according to the tax board, taxes of Rs 60,000 are required to be paid for Rs 12,00,000.

But why do we say that the income is not as high as Rs 1.2 lakh?

This is because taxpayers will receive a maximum tax discount of Rs 60,000.

Tax-free income of Rs 12,75,000 for salary grade individuals

Individuals in salary grade will also receive a standard deduction of Rs 75,000, an option that cannot be used by self-employed people. With this, the tax-free income limit increased to Rs 12,75,000.

What if the income is higher than this?

If the income is slightly above the tax exemption limit of Rs 12,75,000, then the marginal tax relief will apply to taxes, in which case the tax shall not exceed the incremental income.

For example, if a paid-grade person earns Rs 12,90,000, then according to the tax board, their tax is Rs 73,500, but due to the tax deduction, this would be Rs 15,000 in education and health tax.

What if the income is Rs 14,00,000 or more?

In this case, taxpayers can take advantage of many of the deductions available in the new tax regime. We describe some of these here.

NP tax benefits for the new tax system

Employees can receive tax benefits for employers’ contributions to their NPS accounts.

In this case, the maximum benefit is 14% of the employee’s basic salary and dear allowance (DA).

For example, if the employee’s base salary and a DA of Rs 6,00,000, the maximum NPS tax benefit they claim is Rs 84,000.

EPF tax incentives in the new tax system

Taxpayers can also receive tax benefits to employers' EPF contributions.

In this case, the largest possible tax benefit is 12% of the employee’s base salary and DA.

If the employee’s base salary is Rs 7,25,000, the available EPF tax benefit is Rs 87,000.

Reimbursement tax benefits

Salary-grade taxpayers can also get tax benefits for the FlexI portion of their salary.

These components can be entertainment, travel, uniform and stationery reimbursement.

Employees need to create original bills to get tax benefits on such expenses.

Tax benefits can be provided if the taxpayer has already paid tax on these bills.

Tax benefits for housing loans in the new tax system

If a taxpayer has already loaned the property they rent out, they can offset the loss of interest paid on the rent.

The limit for claiming such losses in the form of tax benefits is Rs 2 lakh.

Calculation of the story

We will calculate how your salary income is tax exempt from Rs 1.5 lakh, Rs 1.7 lakh and Rs 1.9 lakh.

In each case, we will give the base salary half of the total salary.

We will show how to make it tax-exempt by requiring different deductions.

How to exempt Rs 1.5 lakh

The basic salary for this income is Rs 7,50,000.

The maximum NP tax benefit for this base salary can be Rs 1,05,000.

On the EPF side, the maximum tax benefit can be Rs 90,000.

After these deductions, the taxable income will be Rs 13,05,000.

If a person's salary is worth Rs 30,000, the taxable income will be Rs 12,75,000, which will be tax-free after the standard deduction of Rs 75,000 and Rs 60,000.

Total salary: 15,00,000
Basic salary Rs 7,50,000
NPS Contribution-Rs 1,05,000
EPF Contributions – Rs 90,000
Flexi pays Rs 30,000

How to tax exemption Rs 1.7 lakh

We assume that at this total salary, the base salary is Rs 8,50,000.

If a person has 14% NPS benefits, it is Rs 1,19,000, while the EPF gain for that base salary is 12%, which is Rs 1,02,000.

The total number of these two benefits will be Rs 2,21,000.

After these deductions, the taxable income will be Rs 14,79,000.

If the value of elastic elements that people get is worth 12% of gross wages, then its value is Rs 2,04,000 and taxable income will be reduced to Rs 12,75,000, which will be tax-free after standard deductions and rebates.

Total salary: 17,00,000

Basic salary – Rs 8,50,000

NPS Contribution – Rs 1,19,000

EPF Contributions – Rs 1,02,000

Travel allowance – Rs 1,04,000

Entertainment allowance – Rs 40,000

Books and journal allowances Rs 30,000

Uniform allowance – 30,000 rupees

How to make the salary of Rs 1.9 lakh tax-free

We assume that the basic salary of the employee is Rs 9,50,000. With the base salary and 14% of the GA, the maximum NP benefit for this salary is Rs 1,33,000.

On the other hand, the largest EPF tax incentive is Rs 1,14,000.

The sum of the two is Rs 2,47,000.

These taxable income after deductions will be Rs 16,53,000.

If you are 14% of your total salary as a FlexI component, the deduction will be Rs 2,66,000.

After deduction, taxable income will be Rs 13,87,000.

If you have obtained a home loan for renting the property, you will pay Rs 25 lakh interest on a rent of Rs 1.35 lakh in the financial year, you can further claim a deduction of Rs 1,15,000.

After obtaining this tax benefit, taxable income will become Rs 12,72,000. After obtaining the standard deduction and tax discount, income will be tax-free.

Total Salary – Rs 19,00,000

Basic salary Rs 9,50,000

NPS Contribution – Rs 1,33,000

EPF Contributions – Rs 1,14,000

Travel allowance – 1,16,000 rupees

Entertainment allowance – 50,000 rupees

Books and Journals Allowance – Rs 50,000

Uniform allowance – 50,000 rupees

Home Loan Tax Benefits – Rs 1,15,000

(Disclaimer: This is not financial advice. Do your own due diligence or consult an expert for financial planning.)