ITR Filing 2025: How to Pay Zero Tax on ₹15.5 Lakh Annual Income

The Income Tax Return (ITR) filing season for FY25 (AY26) has begun, and the deadline to file has been extended to September 15, 2025. Many taxpayers are exploring ways to optimise their taxes. If your annual income is ₹15.5 lakh and you prefer the new tax regime, you might be surprised to learn that you could potentially pay no tax at all.

Understanding the Goal: Zero Tax under the New Regime

Under the new tax regime, to pay zero tax on an annual income of ₹15.5 lakh, your taxable income needs to come down to ₹12,00,000. With the standard deduction, this effectively means reducing your income to Rs 12.75 lakh.

Let's look at an example using an employee with a gross salary of Rs 15.5 lakh, where the basic pay is Rs 7.75 lakh.

How to Reduce Your Taxable Income?

Here's how you can strategically use certain deductions available in the new tax regime:

1. National Pension System (NPS) Contribution

For government employees, investing in NPS offers a significant tax benefit. Under the new tax regime, you can invest up to 14% of your basic salary in NPS.

• Basic Pay: ₹7,75,000
• NPS Contribution (14% of Basic): ₹1,08,500
• Income after NPS: ₹15,50,000 - ₹1,08,500 = ₹14,41,500

2. Employee Provident Fund (EPF) Contribution

Even a minimum EPF contribution helps reduce your taxable income.

• EPF Contribution (minimum): ₹21,600
• Income after EPF: ₹14,41,500 - ₹21,600 = ₹14,19,900

3. Approved Reimbursements

Some reimbursements, if approved by your employer, can also be deducted as per tax rules.

• Approved Reimbursements: ₹1,00,000
• Income after Reimbursements: ₹14,19,900 - ₹1,00,000 = ₹13,19,900

4. Home Loan Interest (for Rented Property)

This is a crucial deduction if you have a home loan on a property that you have rented out. You can deduct up to ₹2 lakh of the interest paid on such a loan from your rental income, which helps reduce your overall taxable income. It's important to note that for self-occupied properties, there is no deduction for home loan interest under the new tax regime.

• Home Loan Interest Set-off: ₹2,00,000
• Income after Home Loan Benefit: ₹13,19,900 - ₹2,00,000 = ₹11,19,900

Now, since the final calculated taxable income of ₹11,19,900 is below the ₹12,00,000 threshold (or ₹12.75 lakh with standard deduction), your tax liability for the year becomes nil.

Conclusion

While the new tax regime offers lower tax rates by generally removing most deductions, strategic use of available benefits like NPS contributions, EPF, approved reimbursements, and specific home loan interest benefits (for rented properties) can help you significantly reduce your taxable income.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.