How much salary is tax-free in FY 2026-27?

Under the new regime, taxable income up to 12,00,000 is fully tax-free via the Section 87A rebate. Adding the 75,000 standard deduction, a salaried person can earn up to about 12.75 lakh with zero income tax.

How do I pay zero tax if my CTC is above 12.75 lakh?

Move part of your pay into tax-free buckets so your taxable income drops to 12,00,000 or below: employer EPF (12% of basic), employer NPS under 80CCD(2) (up to 14% of basic), and meal coupons (up to about 1,05,600 a year). The planner finds the exact split.

Is employer NPS really tax-free up to 14%?

Yes. In the new regime, the employer NPS contribution under Section 80CCD(2) is tax-free up to 14% of basic salary. It is a separate, powerful lever on top of EPF.

Does my own EPF reduce my tax in the new regime?

No. Only the employer’s EPF is tax-free in the new regime; your matching 12% is paid from post-tax salary (it counts toward 80C only in the old regime).

Yes. These are standard, legal salary-structuring exemptions (Sections 10, 17 and 80CCD(2)). You are choosing how your CTC is paid, not hiding income. Always confirm with your payroll/CA.

How to Pay Zero Income Tax on Your Salary (FY 2026-27)

Updated for FY 2026-27 · illustrative, not financial advice

Short answer: in FY 2026-27 (new regime), salaried income up to about₹12.75 lakh is tax-free: ₹12,00,000 via the Section 87A rebate plus the ₹75,000 standard deduction. Earning more? You can still reach ₹0 tax by routing part of your CTC into tax-free buckets so your taxable income lands at ₹12,00,000 or below. The planner works out the exact amounts.

The ₹12.75 lakh zero-tax line

In the new regime, if your taxable income is ₹12,00,000 or less, the 87A rebate wipes out the tax entirely. Salaried people also get a ₹75,000 standard deduction, so a gross salary of about₹12,75,000 becomes ₹12,00,000 taxable → ₹0 tax.

The three tax-free levers

Employer EPF: 12% of basic, tax-free (your own matching 12% is post-tax).
Employer NPS (Section 80CCD(2)): tax-free up to 14% of basic in the new regime. This is the biggest additional lever.
Meal coupons: tax-free up to ₹200/meal (about ₹1,05,600 a year).

One cap to remember: employer EPF + NPS + superannuation that is exempt is limited to₹7,50,000 a year combined. Anything above is taxed as a perquisite.

Step by step

Start from your CTC and the ₹75,000 standard deduction.
Turn on employer NPS (80CCD(2)) up to 14% of basic, often the fastest way down.
Keep employer EPF at 12% of basic where possible.
Add meal coupons for the remainder.
If needed, raise your basic % to free up more EPF/NPS room.

Worked example: ₹14 lakh CTC

Without structuring, a ₹14,00,000 CTC pays about ₹81,900 tax (taxable ₹13.25 lakh). Route roughly ₹1.25 lakh more into employer EPF/NPS and meal coupons and taxable income drops to ₹12,00,000.Tax becomes ₹0. The trade-off: EPF and NPS are your money too, just locked (NPS till 60). Open the optimiser and it sets the sliders for you.

A few cautions

Only the employer’s EPF/NPS is tax-free; your matching EPF still reduces take-home.
EPF and NPS are locked: EPF is taxable if withdrawn before 5 years of service; NPS is locked till 60 (20% must buy an annuity).
Meal coupons must be employer-provided, non-cashable, and used only for meals/groceries.

Prefer to see it for your own numbers? Use the planner, or readOld vs New regime: which is better? andEmployer NPS (80CCD(2)) explained.

Frequently asked questions

How much salary is tax-free in FY 2026-27?: Under the new regime, taxable income up to 12,00,000 is fully tax-free via the Section 87A rebate. Adding the 75,000 standard deduction, a salaried person can earn up to about 12.75 lakh with zero income tax.
How do I pay zero tax if my CTC is above 12.75 lakh?: Move part of your pay into tax-free buckets so your taxable income drops to 12,00,000 or below: employer EPF (12% of basic), employer NPS under 80CCD(2) (up to 14% of basic), and meal coupons (up to about 1,05,600 a year). The planner finds the exact split.
Is employer NPS really tax-free up to 14%?: Yes. In the new regime, the employer NPS contribution under Section 80CCD(2) is tax-free up to 14% of basic salary. It is a separate, powerful lever on top of EPF.
Does my own EPF reduce my tax in the new regime?: No. Only the employer’s EPF is tax-free in the new regime; your matching 12% is paid from post-tax salary (it counts toward 80C only in the old regime).
Is this legal?: Yes. These are standard, legal salary-structuring exemptions (Sections 10, 17 and 80CCD(2)). You are choosing how your CTC is paid, not hiding income. Always confirm with your payroll/CA.