Maximizing Tax Savings: Strategies Under the New Tax Regime

Can You Pay Zero Tax on a ₹19 Lakh Salary in the New Tax Regime? Here's How

In today’s inflationary world, most salaried professionals are understandably keen to reduce their tax burden. And with the new tax regime promising lower rates and fewer deductions, many are wondering: Is it really possible to pay zero tax even if your income is as high as ₹19 lakh?

It sounds ambitious—and yes, for most people, it takes more than a little financial planning. But with the right mix of exemptions, allowances, and contributions, this goal might just be achievable.

What the New Tax Regime Offers (and Where It Draws the Line)

The revamped tax structure under the new regime is fairly straightforward:

For most taxpayers, income up to ₹12,00,000 is effectively tax-free.
Salaried individuals get a bit more room—up to ₹12,75,000, thanks to the standard deduction.
Beyond this, Section 87A offers a rebate of up to ₹60,000 for income up to ₹12 lakh.

That said, those with annual incomes between ₹15 lakh and ₹20 lakh often end up with a sizeable tax bill unless they structure their finances wisely.

Tax-Friendly Deductions Still Available

Despite the regime’s minimalist approach to exemptions, some powerful tax savers remain in play—especially for salaried folks. Here’s what you can still tap into:

Standard Deduction – ₹75,000

Every salaried person automatically gets this deduction—no paperwork needed.

Employer’s Contribution to EPF – Up to ₹1,26,000

If your employer contributes 12% of your basic salary and DA to your provident fund, you can claim the full amount under Section 80CCD(2). (This might vary for private-sector employees.)

Post Office Interest – ₹3,500 Exempt

Interest earned from some small savings schemes at the post office is exempt under Section 10(15)(i).

Tax-Free Returns from PPF & Sukanya Samriddhi

The interest you earn on PPF and Sukanya Samriddhi Yojana (SSY) remains fully exempt—there’s no upper cap here. This is a solid way to grow money tax-free.

🇮🇳 Contribution to Agni Path Scheme – 100% Exempt

If you’ve contributed to the central government’s Agni Path Scheme, your full contribution qualifies for exemption under Section 80CCH(2).

Family Pension Relief – Up to ₹25,000

If you’re receiving a family pension, up to ₹25,000 (or one-third of it, whichever is lower) is not taxed.

Travel and Allowances – Conditional Deductions

Travel, daily, conveyance, and even entertainment allowances can be claimed—provided you have the bills to prove it. These should be part of your salary structure and are treated on an actuals basis.

Sample Calculation: Reducing Tax on ₹19 Lakh Salary

Here’s a practical example of how you can work your way down to zero tax:

Item	Amount (₹)
Gross Salary	19,00,000
Less: Standard Deduction	75,000
Less: Employer PF Contribution (80CCD(2))	1,26,000
Less: Post Office Interest Exemption	3,500
Less: PPF/SSY Interest	17,500
Net Taxable Income	16,78,000

Now, let’s compute the tax on this income:

Income Slab	Rate	Tax (₹)
Up to ₹3,00,000	Nil	0
₹3,00,001 to ₹6,00,000	5%	15,000
₹6,00,001 to ₹9,00,000	10%	30,000
₹9,00,001 to ₹12,00,000	15%	45,000
₹12,00,001 to ₹15,00,000	20%	60,000
₹15,00,001 to ₹16,78,000	25%	44,500
Total Tax Before Cess		₹1,94,500
Add: Health & Education Cess (4%)		₹7,780
Total Tax Liability		₹2,02,280

You might notice that this is slightly higher than earlier—because the rebate under Section 87A doesn’t apply beyond ₹12 lakh income. But there’s a way to eliminate this too.

How to Bring That Tax Liability to Zero

Here’s where smart planning helps:

Contribute to Agni Path (Section 80CCH(2)) – Let’s say you contribute ₹2,00,000.
Additional Travel Reimbursement – Documented expenses for office transfers or relocations can also be excluded from taxable salary.
Use Daily/Conveyance Allowances – Based on actuals, these can be part of your salary without being taxed.

With a combination of these, the net taxable income dips below critical slab thresholds, reducing or even nullifying your final tax bill.

Additional Tax-Free Benefits to Remember (FY 2025–26)

Don’t miss these lesser-known but still valid exemptions:

Family pension: Up to ₹25,000 tax-free.
Let-out property: 30% of rental income exempt.
Second vacant house: No deemed rent assumed.
Gratuity: Up to ₹25 lakh is exempt (Section 10(10)).
Leave encashment: ₹25 lakh tax-free (Section 10(10AA)).
VRS payout: ₹5 lakh exempt (Section 10(10C)).
Life insurance maturity: Fully exempt (Section 10(10D)).
Office equipment as perks: Non-taxable (e.g., laptops).
Specially-abled transport allowance: Fully exempt.

Final Word

While the new tax regime may not offer the buffet of deductions the old one did, it still leaves room for smart saving—if you know where to look. For those earning even ₹19 lakh a year, zero tax is no longer a pipe dream. But it will require careful structuring, proof of eligible expenses, and sometimes employer cooperation