Introduction
Paying taxes is a responsibility, but what if we told you that you can legally earn income and pay ZERO tax in India?
Yes, under the Income Tax Act and recent government reforms, several exemptions and deductions allow salaried employees, freelancers, and even investors to earn tax-free income up to a certain limit.
In this article, we’ll break down:
- How much you can earn without paying any tax in 2025
- The difference between old and new tax regimes
- Real examples
- Deductions you can claim
- Tools to calculate your tax-free threshold (with our free tax calculator)
- FAQs to clear your confusion
Let’s decode zero-tax income in India step by step.
Understanding the Basics: Tax Slabs in India (FY 2024–25)
In India, you can choose between two tax regimes:
1. Old Tax Regime
Includes deductions like 80C, HRA, 80D, etc.
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2.5 Lakh | Nil |
| ₹2.5 Lakh – ₹5 Lakh | 5% |
| ₹5 Lakh – ₹10 Lakh | 20% |
| Above ₹10 Lakh | 30% |
But due to Section 87A rebate, if your total income is up to ₹5 lakh, your tax liability becomes zero.
2. New Tax Regime (Default Regime from FY 2023–24)
Fewer deductions, but lower tax rates.
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3 Lakh | Nil |
| ₹3 Lakh – ₹6 Lakh | 5% |
| ₹6 Lakh – ₹9 Lakh | 10% |
| ₹9 Lakh – ₹12 Lakh | 15% |
| ₹12 Lakh – ₹15 Lakh | 20% |
| Above ₹15 Lakh | 30% |
Here too, you get a rebate up to ₹7 lakh under Section 87A, meaning no tax if your income is up to ₹7 lakh (without claiming deductions).
Tax-Free Income Threshold in 2025
| Regime | Income Limit (Before Tax Applies) | Remarks |
|---|---|---|
| New Tax Regime | ₹7,00,000 | No deductions needed |
| Old Tax Regime | ₹5,00,000 (Basic) + Deductions → up to ₹10,00,000 can be tax-free | Need to claim deductions like 80C, HRA etc. |
So, if you use the Old Regime smartly, you can actually earn up to ₹10 lakh and pay zero tax!
How to Earn ₹10 Lakh Without Paying a Single Rupee in Tax (Old Regime)
Let’s break it down:
| Component | Amount |
|---|---|
| Standard Deduction | ₹50,000 |
| 80C (LIC, PPF, ELSS, PF) | ₹1,50,000 |
| 80D (Medical Insurance) | ₹25,000 |
| NPS (Section 80CCD(1B)) | ₹50,000 |
| HRA (if applicable) | ₹1,00,000 (approx) |
| Education Loan Interest (80E) | ₹50,000 |
| Home Loan Interest (Section 24b) | ₹2,00,000 |
| Total Deduction | ₹6.25 lakh or more |
Add ₹5 lakh base income + ₹6.25 lakh deductions → You can earn up to ₹10–11 lakh and still legally avoid paying tax.
Try this on our Free Tax Calculator to check your own number.
Completely Tax-Free Income Types in India
These incomes are fully exempt:
- Interest from PPF
- Dividends up to ₹10 lakh (for individuals)
- Agricultural Income
- Gifts from relatives
- Maturity of Life Insurance (ULIP exempt under certain limits)
- Gratuity (up to ₹20 lakh for private employees)
- EPF Withdrawal (after 5 years)
New vs Old Regime – Which One is Better?
| Criteria | Old Regime | New Regime |
|---|---|---|
| Deductions Allowed | ✅ Yes | ❌ No |
| Tax-Free Limit | Up to ₹10L (with planning) | ₹7L max |
| Best For | People with investments & home loans | People without investments or loans |
Use our regime comparison calculator to choose the better one for you.
How to Save Tax Smartly in 2025
- Invest in PPF / ELSS / LIC (80C)
- Buy Medical Insurance (80D)
- Claim Rent (HRA) or Home Loan Benefits
- Invest in NPS (Extra ₹50,000)
- Use Education Loans (80E)
All of these deductions can add up to lakhs of rupees saved legally.
Use Free Tax Calculator Tool
Want to check how much you’ll save?
Try our Income Tax Calculator now – enter your income + deductions, and instantly see:
- Your tax-free limit
- Amount of tax you need to pay
- Best tax regime for you
No signup required. 100% free tool.
Frequently Asked Questions (FAQ)
1. Is income up to ₹7 lakh completely tax-free in 2025?
Yes, if you choose the new tax regime, you don’t need to pay tax if your income is ≤ ₹7,00,000.
2. Can I earn more than ₹7 lakh and still pay zero tax?
Yes, under the old tax regime, if you plan deductions well (like 80C, 80D, HRA, etc.), you can earn ₹9–10 lakh and still pay zero tax.
3. Which is better – old or new tax regime?
It depends on your deductions.
If you invest and claim deductions, old is better.
If you don’t, new regime is easier and better.
4. Is agricultural income completely tax-free?
Yes, under Section 10(1), agricultural income is fully exempt.
5. Do I need to file ITR even if income is below ₹7 lakh?
Yes, if TDS is deducted or income crosses ₹2.5 lakh, you should file ITR. It helps for loans, visas, etc.
6. Can I split income to family members to save tax?
Yes, but you must follow clubbing rules. Better to invest in spouse’s name if they have no income.
7. Are capital gains tax-free?
Only up to a certain limit (e.g., LTCG ₹1 lakh is tax-free from stocks). After that, 10% applies.
Conclusion
Tax-saving in India isn’t just for CA-level experts anymore. With the right tools and knowledge, you can legally reduce your tax to ZERO — even with an income of ₹7 to ₹10 lakh.
Use our Tax Calculator, stay informed, and file your ITR smartly.
Got doubts? Comment below or use our tool to get instant answers.
🔗 Try Now: Free Income Tax Calculator 2025
