SOURCE : NEW18 NEWS
Last Updated:April 28, 2025, 17:09 IST
Thanks to the Union Budget 2025-26, income up to Rs 12 lakh annually has now been made tax-free through a special rebate under the new tax regime.
No Tax On Income Up To Rs 12 Lakh From April 2025.
If you are a salaried employee, get ready for a pleasant surprise in this month’s salary! Thanks to the Union Budget 2025-26, income up to Rs 12 lakh annually has now been made tax-free through a special rebate under the new tax regime. Additionally, the government has revised the new income tax regime slabs for FY26, reducing the overall tax burden across different salary levels.
This means your monthly in-hand salary will rise starting this month itself, April 2025 (the first month of the financial year 2025-26), because lower TDS will be deducted from your salary this month. Let’s break down how much extra you will get depending on your annual income:
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Revised Income Tax Slabs for FY 2025-26 (New Regime)
| Income Slab | Tax Rate |
|---|---|
| Rs 0-4 lakh | Nil |
| Rs 4-8 lakh | 5% |
| Rs 8-12 lakh | 10% |
| Rs 12-16 lakh | 15% |
| Rs 16-20 lakh | 20% |
| Rs 20-24 lakh | 25% |
| Above Rs 24 lakh | 30% |
Along with the slab revision, the government has introduced a full tax rebate under Section 87A for individuals earning up to Rs 12 lakh, ensuring they don’t pay any income tax for FY 2025-26.
Important: It’s not a tax exemption, but a rebate, meaning tax is calculated as per slab rates, but then a rebate wipes off the tax liability up to Rs 12 lakh.
How Much Extra Salary Will You Get Each Month?
Here’s how much more you will take home, thanks to the rebate and slab revision:
| Annual Salary | Yearly Tax Saving | Monthly Additional Salary |
|---|---|---|
| Rs 12 lakh | Rs 80,000 | Rs 6,650 |
| Rs 16 lakh | Rs 50,000 | Rs 4,150 |
| Rs 18 lakh | Rs 70,000 | Rs 5,830 |
| Rs 20 lakh | Rs 90,000 | Rs 7,500 |
| Rs 25 lakh | Rs 1,10,000 | Rs 9,150 |
| Rs 50 lakh | Rs 1,10,000 | Rs 9,150 |
For example, if your salary package is Rs 12 lakh annually, your salary could now increase by nearly Rs 6,650 per month, compared to earlier, due to the tax relief. Similarly, for a person earning Rs 16 lakh annually, the monthly salary would increase by around Rs 4,150.
Those earning Rs 18 lakh annually will save Rs 70,000 yearly, translating into Rs 5,830 more per month in hand.
“A tax payer in the new regime with an income of Rs 12 lakh will get a benefit of Rs 80,000 in tax (which is 100 per cent of tax payable as per existing rates). A person having income of Rs 18 lakh will get a benefit of Rs 70,000 in tax (30% of tax payable as per existing rates). A person with an income of Rs 25 lakh gets a benefit of Rs 1,10,000 (25% of his
tax payable as per existing rates),” Finance Minister Nirmala Sitharaman said during her Budget Speech 2025-26 on February 1, 2025.
Marginal Relief for Salaries ‘Just Above Rs 12 Lakh’
Though the income is tax-free up to Rs 12 lakh, there is a marginal relief for those earning marginally higher than this threshold. However, if your income slightly exceeds Rs 12.75 lakh after adjusting standard deduction of Rs 75,000 (say Rs 12.85 lakh or Rs 13.25 lakh), you will still benefit from a marginal relief so that your additional tax does not wipe away your extra income.
– Income of Rs 12.85 lakh → Only Rs 10,000 tax payable
– Income of Rs 13.25 lakh → Only Rs 50,000 tax payable
– Income of Rs 13.45 lakh → Only Rs 70,000 tax payable
Overall, the government expects to forgo approximately ₹1 lakh crore in direct tax revenue due to these changes.
Importantly, these are rough estimates; for accurate tax savings, you can approach your financial planners.
