Smart Investments: How to Make Rs 19 Lakh Income Completely Tax-Free:

Smart Investments: If your earnings exceed 12 lakhs, this news is relevant for you. With the new tax regime of the Government of India, there is no tax on income upto 12 lakhs. For salaried individuals it is further enhanced to 12.75 Lakhs on standard deductions. But now think of a situation where your salary is Rs 19 Lakhs and you don’t have to pay any taxes.

Indeed, you read that correctly. If you do proper planning and investments under the governments new tax regime, then you stand to make the most out of this and not pay any income tax until 19 lakhs. Today, we will explore how you can make income upto 19 Lakhs tax free.

Basic deduction not exceeding Rs 75,000

Effective from FY 2025-26, the government will make the new tax regime default. That means, unless a taxpayer actively opts for the old tax regime, he will have to pay tax using the auto new tax regime. With this financial year, the new slab also tries to simplify the existing tax structure. Some deductions will also be incorporated. In the current new tax regime, there is a standard deduction of Rs 75,000 for all class of employees.

No tax for earning less than Rs 19 lakh

If your CTC is Rs 19 lakh, you may have the flexibility to structure your salary in such a manner that makes it entirely tax-free.

Basic Salary - Rs 9,97,000

PF - Rs 21,600 (minimum)

Gratuity - Rs 45,600 (4.8 percent of Basic salary)

NPS - Rs 1,33,000 (employee contribution)

Flexi pay tax free component - Rs 3,00,900

Personal allowance: Rs 3,06,900

Total ctc: Rs 19,00,000

To understand it better lets assume CTC is 19L. After deducting standard deduction, balance will be 1900000 - 75000 = 1825000

And then, after deducting EPS and NPS, 1825000 - (21600 + 133000) = 16,670,400. With the new tax arrangement, maximum 14% of employee's basic salary is free for tax as NPS contribution and rest 12% of basic salary is free too.

Use flexi payment

In addition to what has been mentioned, some companies also provide the option of selecting flexi pay which is also exempt from taxation. The employer can maintain an amount of up to three lakh rupees. The user has to provide a claim for mandatory expenditure on books, entertainment and performing other necessary activities. In this manner, Rs 16,70,400- Rs 3,00,900 = Rs 13,69,500.

Moreover, if you have availed a loan for purchasing a house and given that property on rent, you will qualify for a deduction of up to Rs 2 lakh annually on the interest amount under the new tax regime. In this manner your CTC becomes Rs 13,69,500 – Rs 2,00,000 = Rs 11,59,500. This is below the exemption limit of Rs 12 lakh.