A salary of ₹19 lakh a year usually places a taxpayer in a higher tax bracket, leading to a considerable deduction in income tax. However, under the new tax regime with the right exemptions and deductions, it is possible to legally reduce your taxable income to zero or near zero.
Many taxpayers are unaware that by planning their investments and utilising government-approved deductions, they can significantly reduce their tax liability even with a high income.
How a ₹19 Lakh Income Can Become Tax-Free
Under the new tax structure, several standard deductions and exemptions have been introduced that help reduce taxable income. A salaried individual automatically receives a standard deduction, which helps lower the income without extra paperwork.
Once this deduction is applied, the remaining income can be further reduced through contributions to retirement funds, medical insurance premiums, housing loan interest payments and other eligible deductions. These deductions are permitted by the Income Tax Act and are designed to encourage savings, financial security and responsible investment habits.
The Role of Retirement Investments
A significant part of tax planning revolves around contributions to schemes such as the National Pension System. By investing in these government-backed retirement plans, individuals can reduce their taxable income while simultaneously building long-term financial security. Additional deductions are allowed for specific contributions that fall under different sections of the tax laws, which further reduces the tax burden.
Housing Loan Benefits
If the taxpayer has a home loan, the interest paid during the financial year qualifies for a substantial deduction. Many taxpayers with higher salaries use this benefit to bring down their taxable income considerably. With the right balance of home loan interest and retirement investments, the total deductions can be large enough to almost eliminate the tax liability.
Health Insurance and Other Allowances
Health insurance premiums for self and family also add to the deduction basket. These payments not only ensure medical protection but also reduce taxable income. Certain allowances that form part of the salary structure also help employees reduce their taxable earnings.
Final Calculation Without Paying Any Tax
By combining deductions from salary benefits, retirement schemes, home loan interest and health insurance premiums, the taxable income can be brought down drastically from the original ₹19 lakh. In many cases, the final taxable income becomes so low that the individual either pays no tax or pays only a minimal amount after applying all entitled deductions.
Why This Matters for Taxpayers
Understanding how deductions work allows taxpayers to make smarter financial decisions. Rather than feeling burdened by taxes, individuals can plan their savings intelligently and enjoy both immediate tax relief and long-term financial growth. With rising living costs, knowing how to legally reduce tax liability becomes essential for every working professional.
