Will the ₹12 Lakh Tax Rebate Affect You?

Finance Minister Nirmala Sitharaman announced a significant change in the Union Budget 2025, raising the income tax rebate limit under the new tax regime. Individuals with a net taxable income up to ₹12 lakh will now pay zero tax. For salaried individuals, the tax-free threshold increases to ₹12.75 lakh, thanks to the standard deduction benefit of ₹75,000. This is a substantial rise from the previous ₹7 lakh limit.

The revised tax slabs are as follows:

• ₹0 to ₹4 lakh: Nil tax
• ₹4 lakh to ₹8 lakh: 5% tax
• ₹8 lakh to ₹12 lakh: 10% tax
• ₹12 lakh to ₹16 lakh: 15% tax
• ₹16 lakh to ₹20 lakh: 20% tax
• ₹20 lakh to ₹24 lakh: 25% tax
• Above ₹24 lakh: 30% tax

The rebate under Section 87A has been increased from ₹25,000 to ₹60,000. However, this rebate does not apply to special rate incomes like capital gains. The new tax regime aims to simplify tax compliance and provide relief to middle-class taxpayers, promoting higher disposable income and boosting consumption.