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As taxpayers begin preparing Income Tax Returns for Assessment Year 2026–27, many salaried employees are looking for legal ways to reduce their tax burden under the new tax regime. Surprisingly, financial experts say that with proper salary structuring and strategic use of available exemptions, even a ₹20 lakh annual CTC can potentially result in zero tax liability.

Under the current new tax regime, salaried individuals already receive a standard deduction of ₹75,000, effectively making income up to ₹12.75 lakh tax-free in many cases. However, by combining employer contributions, car leasing benefits, meal coupons, and pension-related deductions, the taxable income can be reduced even further.

How the New Tax Regime Can Help Save More Tax

Although the new tax regime offers fewer deductions compared to the old regime, certain salary components still provide substantial tax-saving opportunities. Experts say employees who structure their compensation smartly can significantly reduce their taxable income.

Key Tax-Saving Components

1. Employer Contribution to PF and NPS

Employees can benefit from deductions on employer contributions made toward:

• Provident Fund (PF)
• National Pension System (NPS)

Under current provisions:

• Employer PF contribution up to 12% of basic salary can be tax-efficient
• Employer NPS contribution up to 14% of basic salary can help reduce taxable income

For example:

120000+140000=260000120000 + 140000 = 260000120000+140000=260000

This means PF and NPS together could reduce taxable income by ₹2.6 lakh in this example.

2. Car Leasing Policy

Many companies now offer car leasing as part of employee compensation packages. Under this setup:

• The company leases the car from a leasing provider
• Lease payments are deducted from gross salary
• Employees receive tax benefits because only a fixed perquisite value is added to taxable income

Perquisite Rules

• Cars with engine capacity below 1.6L: ₹5,000 monthly taxable value
• Above 1.6L engine capacity: ₹7,000 monthly taxable value
• Additional ₹3,000 monthly benefit if a driver is provided

This arrangement can substantially lower taxable salary compared to purchasing a car directly.

3. Meal Coupon Exemption

Employees using meal cards like:

• Sodexo
• Pluxee

can also claim tax benefits.

The exemption allows:

• Up to ₹200 per meal
• Annual exemption up to ₹1,05,600

This becomes another effective tool to reduce taxable salary under the new regime.

Example: How ₹20 Lakh CTC Can Become Tax-Free

Here’s an example calculation using available benefits and exemptions.

Annual Salary Structure

Particulars	Amount
Annual CTC	₹20,00,000
Less: Meal Coupon Exemption	₹1,05,600
Less: Employer PF Contribution	₹1,20,000
Less: Car Lease Payments	₹4,20,000
Add: Car Perquisite Value	₹60,000
Less: Standard Deduction	₹75,000
Net Salary	₹13,39,400
Less: Employer NPS Contribution	₹1,40,000
Taxable Income	₹11,99,400

Final Tax Calculation

Under Section 87A rebate provisions:

59940−59940=059940 - 59940 = 059940−59940=0

This means:

• Calculated tax: ₹59,940
• Rebate under Section 87A: ₹59,940
• Final tax liability: ₹0

Important Things to Remember

While this strategy may legally reduce tax liability, experts caution that:

• Actual tax savings depend on company salary structure
• Employer must offer car leasing and meal benefits
• Basic salary composition matters
• Individual tax situations may vary

Employees should also consult a qualified tax advisor before restructuring their salary.

Who Benefits Most From This Strategy?

This approach is especially useful for:

• Salaried professionals earning between ₹15–20 lakh annually
• Employees in large corporate organizations
• Individuals already using company-provided benefits
• Taxpayers opting for the new tax regime

With proper planning, employees can legally optimize salary structures, build retirement savings, and significantly reduce income tax outgo at the same time.

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