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

FAQs

1. Is ₹12.75 lakh completely tax-free?

Yes, for salaried individuals—after standard deduction, taxable income becomes ₹12 lakh, resulting in zero tax.

2. Can I earn ₹15 lakh and still pay zero tax?

Yes, if deductions and tax-free components reduce your taxable income to ₹12 lakh.

3. What is the standard deduction in FY 2026–27?

₹75,000 for salaried individuals.

4. Are capital gains included in tax-free income?

No, capital gains are taxed separately and don’t qualify for rebate.

5. Which regime is better—old or new?

The new regime is better for those with fewer deductions, while the old regime suits those claiming multiple tax benefits.