Income Tax Rule: The government has given a big gift to the middle class by making income up to Rs 12 lakh tax free. According to the new rule, you will not have to pay any kind of tax on income of Rs 12 lakh from April 1, 2025.
But in some cases you may have to pay income tax even on income less than Rs 12 lakh. Yes, some special types of income have been included in this, because in these cases the tax liability will not be zero due to the exemption under section 87A. It has been made clear in the budget that income from certain special cases will not get the benefit of income tax exemption under section 87A.
Where will you not get discount?
The government has kept the income from section 111A (short term capital gains), section 112 (long term capital gains) etc. separate from the exemption under section 87A. This simply means that if your annual income is Rs 12 lakh, in which your salary is Rs 8 lakh and Rs 4 lakh is from capital gains (such as profit from stock market or property), then tax exemption under section 87A will be available only on Rs 8 lakh. That is, you will have to pay income tax separately on capital gains of Rs 4 lakh. In this, you will get exemption only on 8 lakh out of Rs 12 lakh and will not get it on the remaining four lakh.
10% tax on income of eight to 12 lakhs
As per the new tax slab, there is a tax of 10% on income of eight to 12 lakh rupees. In this way, in the financial year 2026, there will be no tax on your income up to 8 lakhs with the exemption of section 87A. But on the remaining four lakh rupees, 10% income tax will be levied as per the tax slab according to short term capital gain (profit in the stock market), which is Rs 40,000. Similarly, if your income is more than 12 lakhs and it includes both your salary and short term capital gain, then you will have to pay income tax as per the tax slab on the income from the stock market.
Exemption will be available under the old regime
Experts say that the rebate available under 87A will be rejected only under the new tax regime. This is not the case in the old tax regime. For the old tax regime, the tax exemption under section 87A is still available on special rate income like STCG (short term capital gain) included in section 111A and LTCG (long term capital gain) included in section 112. The exemption under section 87A on long term capital gain on equity (included in section 112A) was not available earlier in both the regimes (new and old) and no change has been made for it in the budget.
Revised slabs under the new tax regime
– >> No tax on income up to Rs 4,00,000
>> 4,00,001 to Rs 8,00,000 5%
>> 8,00,001 to Rs 12,00,000 10%
>> 12,00,001 to Rs 16,00,000 15%
>> 16,00,001 to Rs 20,00,000 20%
>> 20,00,001 to Rs 24,00,000 25%
>> 30% on income above Rs 24,00,001
