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    How To Pay Zero Tax | PNB Metlife


    Can I pay zero tax at an income level of Rs 9.5 lacs?

    Last Updated On 17-07-2023

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    If you’re a salaried employee and earning around Rs. 9.5 lacs per year, the burden of income tax could erode a huge portion of your earnings. Fortunately, with the right kind of planning, you can pay zero taxes. By getting to know the many provisions made available in the Income Tax Act, you can crack the code and learn how to pay zero income tax. If you’re not aware of the deductions and exemptions available to you, worry not, because with this guide, you’ll quickly learn how to pay zero taxes even with an income level as high as 9.5 lacs per year.

    Step 1: Claim the standard deduction

    The interim budget in 2019 gave salaried employees all over the country a reason to rejoice. Under the many proposed amendments offered by the budget, one of the most helpful provisions was an increase in the standard deduction. After the changes, salaried employees can claim up to Rs. 50,000 as a standard deduction from their income under the head salaries.

    So, if you’re earning Rs. 9.5 lacs per annum, the first step in your endeavor to pay zero taxes should be to claim the standard deduction under section 16(ia) of the Income Tax Act.

    Your effective taxable income after claiming this deduction would be Rs. 9 lacs.

    Step 2: Deduct the interest you paid on your housing loan

    When figuring out how to pay zero taxes, many people tend to overlook a very useful provision made under section 24 of the Income Tax Act. This section pertains to assesses who have availed a housing loan.

    If your house is rented out: If the house for which you’re repaying your loan is currently rented out, you can claim the whole of the interest paid on the loan as a deduction under section 24.

    If your house is vacant or self-occupied: If your house remains vacant, or if you’re residing in the said house, you can claim interest up to a maximum of Rs. 2 lacs as a deduction under this section.

    There are also certain other conditions to be fulfilled under section 24, if you intend to make use of this deduction. These conditions are listed here.

    • You should have availed the home loan on or after 1st April 1999.
    • The loan should have been used only for acquiring or constructing a house property (and not for any repairs or reconstruction).
    • The construction or purchase of the house property should be completed within 5 years from the end of the financial year in which you availed the housing loan.
    • You should possess an interest certificate issued by the lender containing the details of the interest payable on the loan.By using the provisions of this section and by assuming a deduction of Rs. 2 lacs as interest on housing loan, your effective taxable income after claiming this deduction would be Rs. 7 lacs.

    Step 3: Make use of section 80C deductions

    With most taxpayers slowly growing aware of section 80C, the investment options under this section are becoming popular among salaried assesses. Investing in the instruments that qualify for the 80C deduction is another key step to take if you’re interested in learning how to pay zero taxes. By using this provision, you can claim a deduction of up to Rs. 1.5 lacs. Some of the investment options under this section are listed here.

    • Tax-saving fixed deposits
    • PPF (Public Provident Fund)
    • EPF (Employee Provident Fund)
    • NPS (National Pension Scheme)
    • NSC (National Savings Certificate)
    • ULIP (Unit linked Insurance Plans)

    Additionally, the premium paid for a life insurance plan or a term insurance policy can also be claimed as a deduction. You can learn more about Term Insurance by browsing the website for the various Term Plan offered by PNB MetLife.

    Discover the benefits of income protection insurance at PNB Metlife, to protect yourself against the uncertainties of the future. You can use the income tax calculator and guaranteed income plan calculator as assisting tools in your wealth planning journey.

    Once you’ve claimed the deductions under section 80C, your effective taxable income would be Rs. 5.5 lacs.

    Step 4: Deduct premium paid on health insurance

    Health or medical insurance is another important investment that can get you closer to your goal of learning how to pay 0 income tax. Section 80D of the Income Tax Act allows you to claim up to Rs. 25,000 of the premium paid on health insurance taken for yourself or your family (spouse and kids). Additionally, if you also pay premium on health insurance taken for your parents, you can claim another deduction up to a maximum of Rs. 25,000 (or Rs. 50,000, if your parents are senior citizens). Effectively, that brings your total deduction under section 80D to a minimum of Rs. 50,000.

    Upon claiming this deduction, your taxable income comes down to Rs. 5 lacs.

    Step 5: Rebate under section 87A

    This is another thing the interim budget 2019 amended, making it possible for people with incomes over Rs. 9.5 lacs to bring their tax liability down to zero. Under section 87A, assesses with a total taxable income of Rs. 5 lacs or lower can claim a tax rebate of up to Rs. 12,500.

    So, if you’ve succeeded in bringing your total income down to Rs. 5 lacs in accordance with the steps listed above, your taxable income after claiming the basic exemption limit (of Rs. 2.5 lacs) would be Rs. 2.5 lacs.
    On this, applying a tax rate of 5%, your tax liability would be Rs. 12,500. 

    Subject this tax liability to the rebate u/s 87A, and you’re effectively left with zero income tax payable.


    Here’s a quick look at the process of how to pay zero taxes in a tabular format, so you can understand it better.



    Total taxable income
    (in rupees)


    Income under the head salary



    Less: Standard deduction u/s 16(ia)



    Net income under the head salary (a – b)






    Income under the head house property



    Less: Deduction u/s 24



    Net income under the head house property (d – e)






    Gross total income (c + f)






    Less: Deduction u/s 80C



    Less: Deduction u/s 80D






    Total income (g – h – i)






    Less: Basic exemption






    Taxable income (j – k)



    Tax on taxable income at 5%



    Less: Rebate u/s 87A






    Tax payable (m – n)


    A bonus tip

    Even if you are not a salaried employee, you can still pay zero taxes on an income of Rs. 9.5 lacs. All you need to do is substitute the standard deduction of Rs. 50,000 u/s 16(ia) with the maximum deduction allowed u/s 80CCD(1B), which is also Rs. 50,000. According to section 80CCD(1B), you can claim up to Rs. 50,000 for investments made in the National Pension Scheme (NPS).

    To know more about term plan, life insurance, term insurance, long term savings visit PNB MetLife website.

    The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability. The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using the tax-saving deductions and exemptions, if possible. 

    *Tax benefits are subject to conditions and other provisions of the Indian tax laws and are subject to amendments made thereto from time to time.


    The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.

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    Call us Toll-free at 1-800-425-6969 Phone: 080-66006969, Website:, Email: or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203


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