In a major relief for salaried individuals and middle-class taxpayers, the Indian government has revised the income tax structure, offering significantly higher tax exemptions under the new tax regime — meaning more people may not have to pay income tax even if their annual salary approaches ₹15 lakh.
Under the revised tax slabs effective from April 1, 2025, the government has increased the tax rebate limit and adjusted slab rates to reduce the tax burden on individuals. According to these changes:
- Individuals with taxable income up to ₹12 lakh are eligible for a full tax rebate under Section 87A, which means no income tax is payable on income up to this amount.
- For salaried taxpayers, the introduction of a standard deduction of ₹75,000 means that if your gross salary is up to around ₹12.75 lakh, your taxable income can still fall below the ₹12 lakh rebate limit — resulting in zero tax liability.
- Even if your total income is a bit above ₹12 lakh — for example ₹13–15 lakh — your effective tax payable could still be lower than before, thanks to the expanded slabs and higher rebate limits.
Here’s how this works in practice:
Income up to ₹12 lakh: Under the new regime, your tax rate is effectively zero due to the rebate — so you don’t pay income tax up to this level.
Income between ₹12 lakh and ₹15 lakh: This portion is taxed at the 15% slab under the new regime, but rebate benefits and standard deductions can substantially reduce your tax liability compared with previous years.
What This Means for You
- Millions of salaried taxpayers will now see much lower tax bills or may even fall into a zero-tax bracket, boosting take-home pay and disposable income.
- Although the headline often cited on social media is “no tax up to ₹15 lakh,” it’s important to understand the underlying rules: the full rebate applies up to ₹12 lakh of taxable income, and standard deductions can effectively raise the gross salary threshold somewhat beyond that.
- Tax is still payable on income above these thresholds and on special types of income — such as capital gains or business income — which aren’t covered by the ordinary rebate rules.
Example
If a salaried individual earns ₹15 lakh in a financial year:
- After the standard deduction of ₹75,000, the taxable income may drop to around ₹14.25 lakh.
- Under the new slabs, only the portion above ₹12 lakh will attract tax at applicable rates, meaning the total tax payable is considerably less than before — even if not zero.
Bottom Line: Thanks to recent tax reforms and rebate enhancements, many middle-income earners in india can enjoy zero or much reduced income tax liability — especially if their taxable income falls close to ₹12 lakh after deductions. However, earning well above this level (e.g., ₹15 lakh and above) typically still results in some tax, though at lower rates than in previous years.
Disclaimer:
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