Yes, as per the Budget 2025 update, salaried individuals under the new tax regime do not have to pay income tax if their taxable income is up to ₹12.75 lakh.
Now, since your CTC is ₹14 lakh, your taxable income is likely to be higher, but there are ways to bring it down.
First, let’s understand what CTC includes—it’s the total amount your employer spends on you, which covers salary, benefits, bonuses, and contributions to retirement schemes like EPF (Employee Provident Fund) and NPS (National Pension System).
Now, while the new tax regime does not allow most deductions u/s 80C (like LIC, PPF, ELSS, etc.), 80D (health insurance), or HRA, there are two ways you can still reduce your taxable salary.
Under the new regime, you can claim deductions against:
1) Employer’s contribution to EPF: Up to 12% of your basic salary (and DA) is exempt from taxes.
2) Employer’s contribution to NPS: Up to 14% of your basic salary (and DA) is deductible from your taxable income.
So, what should you do?
See, almost every company contributes to EPF on behalf of employees. To check how much is being contributed, take a look at the detailed breakup of your CTC. If needed, you can increase your contribution to 12% of your basic salary, so that your employer also contributes the same amount.
Unlike EPF, NPS is usually voluntary. You’ll need to check whether your employer offers an NPS contribution. If they do, you can restructure your CTC to contribute 14% of your basic pay toward NPS, which your employer will also match.
Now, considering your CTC is ₹14L, let’s assume the basic pay is 50%. In that case, your employer’s maximum contribution to EPF and NPS will be as follows:
Once your taxable salary falls below ₹12.75 lakh*, the net taxable income reduces to under ₹12 lakh after applying the ₹75,000 standard deduction. As a result, no tax is payable under the new regime due to the rebate available under Section 87A.
*assuming you do not have any other income source apart from salary
Lastly, a quick heads-up before you ask your employer to max out EPF and NPS contributions:
a) This will reduce your in-hand salary, as you’ll also need to match these contributions.
b) The amount invested in EPF and NPS is locked-in for a long time, and you won’t be able to access it before maturity.
So, make sure you consider these factors and make an informed decision based on your goals.