Zero Tax Up to
₹12.75 Lakh.
Did You Know?

The new regime wins for most salaried Indians. It offers zero tax up to ₹12.75 lakh (₹75K standard deduction + ₹12L Section 87A rebate). The old regime only saves more if your total deductions (HRA + 80C + 80D + home loan + NPS) exceed ~₹4.25 lakh. At ₹15L salary, you need ₹4.25L+ in deductions for old regime to win. At ₹25L+, the gap narrows and old regime becomes competitive if you maximize every deduction.

Under the new regime: gross salary up to ₹12.75 lakh is effectively zero tax. The ₹75,000 standard deduction brings taxable income to ₹12 lakh, and Section 87A provides a ₹60,000 rebate making the entire amount tax-free. Under the old regime: income up to ₹5 lakh is tax-free (Section 87A rebate), but with deductions like HRA, 80C, and 80D, a salary of ₹8–10 lakh can also be zero tax.

The 64-year-old Income Tax Act, 1961 was replaced by the Income Tax Act, 2025 effective April 1, 2026. Key changes: 819 sections → 536 sections. "Previous year" renamed to "tax year." "Assessment year" discontinued. 60+ TDS sections consolidated into Section 393 with three structured tables. Section 80C → Section 123 (read with Schedule XV). Section 10 exemptions moved to Schedules II-VII. Same deduction limits — only section numbers changed. All old references are now outdated.

More than most people think — 9 deductions work. ₹75,000 standard deduction, employer NPS up to 14% of basic under 80CCD(2), employer EPF (12% of basic), meal vouchers up to ₹200/meal i.e. ₹1.05L/year (restored for new regime from April 2026 under Rule 15(5)(a)), gift/festival vouchers up to ₹15,000/year, home loan interest on let-out property (no limit), family pension ₹25,000, leave encashment (₹25L), and gratuity (₹20L). It does NOT allow: 80C, 80D, HRA, home loan interest for self-occupied property, 80CCD(1B) NPS self-contribution, or LTA.

Legally, you must file if your gross income before deductions exceeds ₹3 lakh (new regime) or if TDS was deducted. But practically: if your employer deducted TDS and your income is under ₹12.75L, you can file to claim a refund of the TDS (since your actual tax is zero). If no TDS was deducted and income is under the basic exemption limit, filing is not mandatory — but filing a nil return builds credit history and is useful for visa applications and loans.

Section 44ADA is presumptive taxation for freelancers and professionals (doctors, lawyers, architects, CAs, designers, consultants, engineers). If your gross receipts are under ₹75 lakh (₹50 lakh if cash exceeds 5%), you can declare just 50% as taxable income — no books, no audit, no expense tracking required. Pay all advance tax in one shot by March 15. This is the simplest way to file taxes as a freelancer in India.

The top triggers in 2026: mismatch between your ITR and AIS (Annual Information Statement) — mutual fund redemptions, property sales, FD interest, credit card spends are all auto-reported. Other triggers: high-value cash deposits (₹10L+), not filing ITR when TDS was deducted, wrong ITR form (ITR-1 instead of ITR-2 for capital gains), and underreporting income. The department flagged 1.65 lakh cases for scrutiny in AY 2026 — 3-4x the normal volume.

Five moves: (1) Employer NPS at 14% of basic under 80CCD(2) — saves ₹28,000-84,000/year depending on basic. (2) Meal vouchers at ₹200/meal — ₹1.05L/year tax-free from April 2026 under Rule 15(5)(a), now works in BOTH regimes. (3) Gift/festival vouchers up to ₹15,000/year (tripled from ₹5,000). (4) Company-leased accommodation instead of HRA — perquisite value is 10-15% of actual rent. (5) LTCG harvesting — book ₹1.25L equity gains annually tax-free. Stack all five at ₹20L CTC and you save ₹80,000-1,00,000/year in the so-called no-deduction regime.