Tax-Free Salary: Earn ₹17 Lakh Without Paying Income Tax

Tax-Free Salary: Earn ₹17 Lakh Without Paying Income Tax – Follow These Smart Strategies India-employmentnews | 27/02/2025 00:15:03

Income Tax Saving Tips: Maximize Allowances to Reduce Tax Liability

The Income Tax Department provides various exemptions and deductions, allowing taxpayers to legally reduce their taxable income. By restructuring your salary and optimizing tax-free allowances, you can earn up to ₹17 lakh per year without paying any income tax.

If you work in the private sector, you can take advantage of specific allowances and deductions introduced under the new tax regime. To implement these benefits, you need to coordinate with your company’s HR or payroll department.

How to Make ₹17 Lakh Tax-Free?

The Union Budget 2025 brought significant relief for salaried individuals. The Finance Minister announced that income up to ₹12 lakh per annum is tax-free. However, by leveraging certain allowances and exemptions, a salary of ₹17 lakh can also become completely tax-exempt.

Allowances That Can Help You Save Tax

✅ Reimbursement for Mobile and Internet Bills

Employees can claim full tax exemption on telephone and mobile bill reimbursements provided by their employer. No fixed limit applies under either the new or old tax regime, but the amount should be reasonable and aligned with the employee’s job responsibilities. If this benefit is not part of your salary, request your HR department to include it.

✅ Transport Allowance for Disabled Employees
Disabled employees are entitled to a tax-free transport allowance to cover commuting expenses between home and office. According to tax rules, such employees receive an exemption of ₹3,200 per month or ₹38,400 annually.

✅ Conveyance Reimbursement
This allowance, distinct from transport allowance, is tax-free if an employee submits bills to the company’s finance department. If this benefit is not included in your salary structure, consult your HR department to avail of it.

✅ Employer’s Car Lease Policy
Many companies offer a car lease facility to employees. Though it is considered a perquisite, its taxable value remains low.

📌 Taxable Perquisite Value:
🚗 Car with engine capacity below 1.6L: ₹1,800/month taxable

🚗 Car with engine capacity above 1.6L: ₹2,400/month taxable

Both new and old tax regimes use the same valuation formula for this perquisite.

Additional Deductions in the New Tax Regime

✅ Standard Deduction of ₹75,000
✅ Employer’s Contribution to NPS (up to 14%) – Tax-Free
✅ Employee’s EPF Contribution (12%) – Tax-Free

By combining these exemptions and deductions, your effective taxable income can be reduced to zero on a salary of ₹17 lakh per year.

Final Thoughts

Understanding and optimizing your salary structure can help you legally reduce tax liability while maximizing take-home pay. Speak with your HR department to implement these changes and enjoy tax-free earnings.