In India, individuals with a total annual income up to ₹12.75 lakh (under the new tax regime, including standard deduction) can effectively pay zero tax due to rebates. Other categories include farmers with agricultural income, senior citizens with income up to ₹5 lakh, and individuals using exemptions for investments.
In her 2025 Budget speech, Finance Minister Nirmala Sitharaman shared big news. Under the new regime, if you earn up to Rs 12 lakh, you will not have to pay any income tax. Salaried taxpayers get an extra benefit too. The standard deduction, which was Rs 50,000 before, has now gone up to Rs 75,000 for the new regime.
Examples of income that are not taxable in India include agricultural income, gifts and inheritances, interest on EPF and PPF, scholarships and awards, life insurance proceeds, leave encashment, gratuity, Long-Term Capital Gains (LTCG), and interest on tax-free bonds.
List of Tax-Free Income Sources in India
Any income which has a base source of agriculture is tax-free. Anything that you receive as 'inheritance' is tax-free. You are not liable to pay any taxes (for pushtaini jaydad). Under section 80E, Interest on education loan is also tax-free.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
Members of a federally recognized Indian tribe are subject to federal income and employment tax and the provisions of the Internal Revenue Code (IRC), like other United States citizens. Determinations on taxability must be based on a review of the IRC, treaties and case law.
Yes , You can pay Zero tax on Rs 12 lakhs salary by claiming deduction and exemption like HRA exemption , 80C deduction , Standard deduction , Housing loan interest etc. Provision to pay zero tax on Rs 12 salary exists in the new tax regime by leveraging all the existing deduction and exemption.
6 Indian Tax-Free Income and Investment Options in 2026
Buying goods tax free does not mean travellers are exempt from paying applicable taxes on their purchases when they get home; however, they will generally be able to benefit from an allowance of a certain amount on import.
98% of India's population does not pay income tax. The remaining 2% are mostly middle-class taxpayers, contributing to the majority of the nation's income tax revenue.
One easy way to pay no income tax is to have little or no taxable income. For tax year 2025, taxpayers receive a standard deduction of $15,750 (singles or married persons filing separately) or $31,500 (marrieds filing jointly). For heads of households, the standard deduction is $23,625 for tax year 2025.
As per section 207, a resident senior citizen (i.e., an individual of the age of 60 years or above) not having any income from business or profession is not liable to pay advance tax.
Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.
These include HP, Nike, Jacobs Engineering, Advanced Micro Devices and Ecolab. Tax breaks for renewable energy are part of the tax avoidance scheme for several companies, including Qurate Retail, Xcel Energy, DTE, and Duke Energy.
With the recent changes in the Indian Income Tax Act, it's now possible to pay zero tax on a salary of up to Rs. 7 lakhs. To pay zero tax on a 7 lakh salary using the old tax regime, maximize deductions: Claim Tax Rebate under Section 87A.
5 more ways to get tax-free income
The Union Budget 2025 introduced a major income tax relief for the middle class – making annual incomes up to ₹12 lakh completely tax-free* under the new regime. This means if your taxable income is ₹12 lakh or less, you owe zero tax* for the year.
How to File a Return with No Taxable Income. If you attempt to file a return with no taxable income, the IRS may reject it. To avoid this, you can report a nominal amount—such as $1 of interest income—to successfully file your return.
How can I save 100% income tax in India?
According to government reports, while over 7 crore people file tax returns, only a fraction of them actually pay taxes because many fall below the taxable income threshold or use deductions to reduce liability.
Sikkim is the only state in India where eligible native residents don't pay income tax, thanks to special constitutional provisions under Article 371 (F).