The new income tax regime has become increasingly attractive for salaried individuals—and FY 2026–27 takes it a step further.

Many taxpayers still believe that tax-free income is capped at ₹7 lakh. But under the latest rules, you could earn close to ₹15 lakh and still pay zero tax—if structured correctly.

Let’s understand how this works.

💡 The Big Update: ₹12 Lakh = Zero Tax

Under the new tax regime:

• Taxable income up to ₹12 lakh = Zero tax
• This benefit comes from the Section 87A rebate

This is a major jump from earlier limits and significantly benefits middle-income earners.

📊 How ₹12.75 Lakh Salary Becomes Tax-Free

Here’s where it gets interesting for salaried individuals:

• Standard deduction: ₹75,000
• If your salary = ₹12.75 lakh
• Taxable income = ₹12 lakh

👉 Result: Zero tax liability

🎁 Additional Boost: Tax-Free Perks

The new regime also allows certain tax-free components:

1. Gift & Voucher Benefit

• Up to ₹15,000 per year tax-free
• Not included in taxable income

👉 So effectively:

• ₹12.75 lakh (salary)
• • ₹15,000 (perks)
    = ₹12.90 lakh with zero tax

🚀 Can You Earn ₹14.80 Lakh and Still Pay Zero Tax?

Yes—this is where smart structuring comes in.

By combining:

Here’s an example breakdown:

• Annual CTC: ₹14,80,000
• Basic Salary (50%): ₹7,32,500
• Deductions and exemptions
• Employer NPS contribution (14% of basic): ₹1,02,550
• Employer EPF contribution (12% of basic): ₹87,900
• Standard deduction: ₹75,000
• Gift vouchers: ₹15,000

Taxable income calculation:

The taxable income comes down to approximately ₹11.85 lakh, which is below the ₹12 lakh threshold.

Component	Amount (₹)	Notes
Annual CTC	14,80,000	Total cost to company
Basic Salary (50%)	7,32,500	50% of CTC
Employer NPS Contribution (14% Basic)	1,02,550	Deduction
Employer EPF Contribution (12% Basic)	87,900	Deduction
Standard Deduction	75,000	Deduction
Gift Vouchers	15,000	Exemption
Total Deductions & Exemptions	2,80,450	Sum of above
Taxable Income	~11,85,000	CTC – Deductions

⚠️ Important Conditions to Remember

1. Taxable Income Matters (Not Gross Income)

Zero tax applies only if taxable income ≤ ₹12 lakh

2. Special Income is Not Covered

• Capital gains (stocks, mutual funds)
• Certain other incomes

👉 These are taxed separately and don’t qualify for rebate

3. New Regime is Default

The new tax regime is now the default system, making it easier for most taxpayers.

📈 New Tax Slabs FY 2026–27

Here’s a quick look at the new regime:

• Up to ₹4 lakh → Nil
• ₹4–8 lakh → 5%
• ₹8–12 lakh → 10%
• ₹12–16 lakh → 15%
• ₹16–20 lakh → 20%
• ₹20–24 lakh → 25%
• Above ₹24 lakh → 30%

🧠 Who Benefits the Most?

The new tax regime is ideal for:

• Salaried individuals with fewer deductions
• Young professionals
• People who prefer simple tax filing

It may not suit:

• Individuals with heavy deductions (home loan, 80C, etc.)

🔑 Key Takeaways

• ₹12 lakh taxable income = zero tax
• Salaried individuals can earn up to ₹12.75 lakh tax-free
• With perks, effective tax-free income can go close to ₹15 lakh
• Standard deduction plays a crucial role
• Special income like capital gains is still taxable