{"id":42417,"date":"2024-06-03T14:35:12","date_gmt":"2024-06-03T14:35:12","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=42417"},"modified":"2026-02-16T12:10:36","modified_gmt":"2026-02-16T06:40:36","slug":"how-7-lakh-income-is-tax-free","status":"publish","type":"post","link":"https:\/\/www.tatacapital.com\/blog\/generic\/how-7-lakh-income-is-tax-free\/","title":{"rendered":"How is 7 lakh income tax-free?"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p>Recently, there have been significant updates to India\u2019s tax regulations. These include rebates for incomes up to Rs. 7 lakhs. This means that under the new regime, individuals with incomes lower than Rs. 7 lakh will not be required to pay taxes if they opt for the new system. This article demystifies how these regulations work and how you can benefit from them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>New tax slabs and rates<\/strong><\/h2>\n\n\n\n<p>The new tax regime has introduced revised tax slabs and rates. The structure begins with zero tax for income up to Rs. 4 lakh and scales up to higher percentages for larger income brackets.<\/p>\n\n\n\n<p>This progressive system ensures that lower-income earners have a reduced tax liability, and for those earning up to Rs. 7 lakh, the tax can be zeroed out with the help of rebates and deductions.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Income Tax Slabs<\/td><td>Tax Rates<\/td><\/tr><tr><td>Up to Rs. 4,00,000<\/td><td>NIL<\/td><\/tr><tr><td>Rs. 4,00,001 \u2013 Rs. 8,00,000<\/td><td>5%<\/td><\/tr><tr><td>Rs. 8,00,001 \u2013 Rs. 12,00,000<\/td><td>10%<\/td><\/tr><tr><td>Rs. 12,00,001 \u2013 Rs. 16,00,000<\/td><td>15%<\/td><\/tr><tr><td>Rs. 16,00,001 \u2013 Rs. 20,00,000<\/td><td>20%<\/td><\/tr><tr><td>Rs. 20,00,001 \u2013 Rs. 24,00,000<\/td><td>25%<\/td><\/tr><tr><td>Over Rs. 24,00,000<\/td><td>30%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Several additional deductions are possible for those who <a href=\"https:\/\/www.tatacapital.com\/blog\/generic\/income-tax-slab-fy-2025-26\/\">choose the new regime for FY 2025-26<\/a>. These include:<\/p>\n\n\n\n<ul>\n<li>Under section 87A, the rebate has been increased from Rs. 25,000 to Rs. 60,000.<\/li>\n\n\n\n<li>Relaxations have also been made on slab rates, and tax incidence will be zero for incomes up to Rs. 12,00,000.<\/li>\n\n\n\n<li>Marginal relief on rebates is also still applicable<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Impact of the increased exemption limit<\/strong><\/h2>\n\n\n\n<p>For the fiscal year 2025-26, if you choose to follow the new tax regime, you are privy to a considerable advantage:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>How 7 lakh income is tax-free becomes a practical reality for you.<\/strong><\/h3>\n\n\n\n<ul>\n<li>Filing an income tax return (ITR) becomes optional if your gross taxable income does not exceed the Rs. 4 lakh mark.<\/li>\n\n\n\n<li>Additionally, the enhanced basic exemption limit contributes to substantial tax savings.<\/li>\n\n\n\n<li>Lastly, individuals will now get to enjoy higher disposable incomes. This means investments into mutual funds and other fund classes are also likely to witness growth.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Difference between the new and old tax regimes for a Rs. 7 lakh income<\/strong><\/h2>\n\n\n\n<p>At the start of FY 2024-25, salaried individuals can choose between the old or new tax regime, with the new regime as the default:<\/p>\n\n\n\n<ul>\n<li>This choice is communicated to their employer and cannot be changed mid-year. However, they can switch to a different regime when filing their tax returns in July 2025, with the same FY 2025-26 rules:<ul><li>Tax is deducted under the default new regime if salaried employees don\u2019t specify a choice.<\/li><\/ul><ul><li>The income tax filing deadline for FY 2024-25 (AY 2025-26) is 31 July 2025. A delayed filing is allowed until 31 December 2025 if the initial deadline is missed.<\/li><\/ul>\n<ul>\n<li>Taxpayers who wish to opt for the old tax regime must fill out Form 10-IEA, allowing them to choose between the two regimes.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Old regime deductions to hit zero tax on Rs. 7 lakh<\/strong><\/h2>\n\n\n\n<p>Tax rates in the old regime are higher than those in the new regime. However, it is still possible to reduce taxes to zero on an income of Rs. 7 lakh under the old tax regime by using appropriate deductions and exemptions.<\/p>\n\n\n\n<ul>\n<li>Standard deduction: Salaried individuals can claim a standard deduction of Rs. 50,000 to reduce taxable income.<\/li>\n\n\n\n<li>Section 80C: Under this section, you can claim a deduction of up to Rs. 1.5 lakh for investments in PPF, EPF, ELSS, <a href=\"https:\/\/www.tatacapital.com\/insurance\/life-insurance.html\">life insurance<\/a>, or tuition fees.<\/li>\n\n\n\n<li>Section 80D: You can further claim Rs. 25,000 against <a href=\"https:\/\/www.tatacapital.com\/insurance\/health-insurance.html\">health insurance premiums<\/a> paid for yourself and family.<\/li>\n\n\n\n<li>HRA exemption: If you pay rent, the house rent allowance can significantly reduce your taxable salary.<\/li>\n\n\n\n<li>Section 80TTA: This section enables you to claim up to Rs. 10,000 on savings account interest.<\/li>\n<\/ul>\n\n\n\n<p>Together, these benefits help you reduce your taxable income enough to bring tax liability close to zero under the old regime.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How to actually pay zero tax on Rs. 7 lakh income: Step-by-step<\/strong><\/h2>\n\n\n\n<p>To navigate the new tax laws effectively, one must understand the roadmap to achieving a tax-free income of Rs. 7 lakh:<\/p>\n\n\n\n<ol start=\"1\">\n<li>Assess your income: Understand your gross income and categorize it appropriately to determine your taxable income.<\/li>\n\n\n\n<li>Opt for the new tax regime: Elect to adopt the new tax regime when filing your returns. This regime offers the Rs. 7 lakh exemption threshold.<\/li>\n\n\n\n<li>Maximize deductions: Make prudent investments and expenditures that qualify for deductions under the new regime.<\/li>\n\n\n\n<li>Utilize the rebate: Ensure that your taxable income falls within the Rs. 7 lakh bracket to take full advantage of the Section 87A rebate.<\/li>\n\n\n\n<li>Filing your returns: Accurately file your income tax returns, claiming the rebate and deductions to reduce your taxable income to nil.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p>The revised tax regime in India presents an opportunity for individuals earning up to Rs. 7 lakh to reduce their tax liability significantly. The higher exemption limit, the introduction of the enhanced Section 87A rebate, and the restructured tax slabs all contribute to this possibility.<\/p>\n\n\n\n<p>For those who are still navigating these changes or for anyone seeking to understand how to maximize their tax benefits, <a href=\"https:\/\/www.tatacapital.com\/\">Tata Capital<\/a> can provide tailored guidance. By carefully planning and understanding the new tax laws, taxpayers can not only comply with their tax obligations but also improve their financial well-being.<\/p>\n\n\n\n<p>This journey to a tax-free income is not just about understanding the new laws but also about effectively applying them to your financial planning. With the right approach, an income of up to Rs. 7 lakh can indeed be free from tax, and you can enjoy the benefits of your hard-earned money to the fullest.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.tatacapital.com\/blog\/generic\/\">Read More Blogs<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Recently, there have been significant updates to India\u2019s tax regulations. These include rebates for incomes up to Rs. 7 lakhs. This means that under the new regime, individuals with incomes lower than Rs. 7 lakh will not be required to pay taxes if they opt for the new system. This article demystifies how these regulations [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":42419,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[74],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tax on 7 lakh Income - How is 7 lakh income tax-free in India? | Tata Capital<\/title>\n<meta name=\"description\" content=\"Learn how to make Rs. 7 lakh income tax-free in India for FY 2025\u201326. Understand rebates, deductions, and new vs old regime calculations.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax on 7 lakh Income - How is 7 lakh income tax-free in India? | Tata Capital\" \/>\n<meta property=\"og:description\" content=\"Learn how to make Rs. 7 lakh income tax-free in India for FY 2025\u201326. 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