Many salaried employees wonder whether it is truly possible to pay Nil tax on a ₹15 lakh salary in FY 2026‑27. At first glance, the figure seems high enough to attract significant tax liability. However, with the right use of deductions, exemptions, and rebates under the Income Tax Act2025, the outcome can be surprising. In this article, we will explore the truth behind this claim, step‑by‑step calculations, and practical strategies that make it achievable.
Understanding the Basics
First, let us recall that the new tax regime and the old tax regime continue to coexist. While the new regime offers lower slab rates, the old regime provides multiple deductions. Therefore, employees must carefully evaluate which regime benefits them most. Moreover, the government has introduced higher standard deductions and enhanced rebates under Section 87A, making tax planning more favourable.
Salary Structure Assumptions
To illustrate, assume a private employee earns a gross salary of ₹15,00,000. The salary includes basic pay, HRA, allowances, and other components. Now, the question arises: can this person legally reduce taxable income to zero? The answer depends on how effectively deductions and exemptions are claimed.
Step‑by‑Step Calculation
1. Standard Deduction
o Every salaried employee receives a standard deduction of ₹75,000.
o Taxable salary reduces to ₹14,25,000.
2. House Rent Allowance (HRA)
o If the employee lives in a metro city and pays rent, HRA exemption can be substantial.
o Suppose HRA exemption amounts to ₹2,50,000.
o Taxable salary reduces to ₹11,75,000.
3. Section 80C Deductions
o Investments in PF, LIC, ELSS, tuition fees, and home loan principal repayment qualify.
o Maximum deduction: ₹1,50,000.
o Taxable salary reduces to ₹10,25,000.
4. Section 80D (Medical Insurance)
o Premiums for family and parents can fetch a ₹50,000 deduction.
o Taxable salary reduces to ₹9,75,000.
5. Home Loan Interest (Section 24)
o Deduction up to ₹2,00,000 for self‑occupied property.
o Taxable salary reduces to ₹7,75,000.
6. NPS Contribution (Section 80CCD(1B))
o Additional deduction of ₹50,000.
o Taxable salary reduces to ₹7,25,000.
7. Other Deductions
o Education loan interest, donations under Section 80G, and savings account interest under Section 80TTA can further reduce income.
o Assume combined deductions of ₹1,25,000.
o Taxable salary reduces to ₹6,00,000.
Applying Section 87A Rebate
Now comes the crucial part. Under the Income Tax Act 2025, individuals with taxable income up to ₹7,00,000 under the new regime qualify for a full rebate of ₹25,000. Consequently, even though the taxable income is ₹6,00,000, the final tax liability becomes zero.
Thus, yes—it is possible to pay zero tax on a ₹15 lakh salary in FY 2026‑27, provided deductions and exemptions are maximised.
Why This Works
· Firstly, the government aims to encourage savings and investments.
· Secondly, rebates under Section 87A ensure relief for middle‑class taxpayers.
· Thirdly, careful structuring of salary components like HRA and allowances plays a vital role.
· Finally, combining deductions across multiple sections creates a powerful tax shield.
Practical Tips for Employees
· Plan early: Begin tax planning at the start of the financial year.
· Invest smartly: Choose instruments under Section 80C that align with long‑term goals.
· Maintain records: Keep rent receipts, insurance premium proofs, and investment documents ready.
· Consult professionals: Tax practitioners can help optimise salary structures.
· Review annually: Laws change, so update strategies every year.
Common Misconceptions
· Many believe only low‑income earners can avoid tax. In reality, even higher salaries can achieve zero liability with proper planning.
· Some assume deductions are complicated. However, most are straightforward if documented correctly.
· Others think the new regime eliminates deductions. While true for many, the rebate under Section 87A still provides relief.
Conclusion
In conclusion, the claim of zero tax on ₹15 lakh salary in FY 2026‑27 is not a myth. Through standard deduction, HRA exemption, Section 80C investments, medical insurance, home loan benefits, NPS contributions, and other deductions, taxable income can be reduced below ₹7,00,000. Consequently, the Section 87A rebate wipes out the liability entirely.
Therefore, private employees should not dismiss this possibility. Instead, they should embrace proactive tax planning, leverage available provisions, and secure maximum benefits. Ultimately, the truth is clear: with smart calculation, a ₹15 lakh salary can indeed attract zero tax in FY 2026‑27.
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