Last Updated on February 2, 2025 at 10:36 am
We have released a free New Tax Regime (new slabs) vs Old Tax Regime Calculator after Budget 2025. We now discuss FAQs.
1. Is income up to 12L or 12.75L tax-free? Both. It is 12L for non-salaried and 12.75L for salaried employees, including the standard deduction.
2. Does this mean 12L is the new tax-free slab?
No! Budget 2024 made Rs. 3L, the tax-free slab and budget 2025 has increased this to Rs. 4L
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3. Then how can income up to 12L/12.75L be tax-free?
The revised tax slab proposed in the finance bill 2025 are
1. Upto Rs. 4,00,000 Nil
2. From Rs.4,00,001 to Rs. 8,00,000 5%
3. From Rs. 8,00,001 to Rs. 12,00,000 10%
4. From Rs. 12,00,001 to Rs. 16,00,000 15%
5. From Rs. 16,00,001 to Rs. 20,00,000 20%
6. From Rs. 20,00,001 to Rs. 24,00,000 25%
7. Above Rs. 24,00,000 30%
However, up to Rs. 12L, the taxable income will get a rebate equal to the tax. This is easy to understand using our linked calculator — for example, the tax for an income of Rs. 12L is Rs. 52,500. For income < or = 12L, a rebate equal to the tax applies. So, the rebate here is Rs. 52,500. So the net tax to be paid is Rs. 52,500 – Rs. 52,500 = 0.
4 How will capital gains be taxed now? Income tax slab rates do not apply to capital gains. They are taxed at the same special rates as modified in Budget 2024. See Capital Gains Taxation Rules Ready Reckoner.
5 What if I have no income source and only capital gains? Can I book tax-free long or short-term gains up to Rs. 12L each year?
No! Capital gains up to the tax-free slab alone are exempt from tax. So, Capital gains up to Rs. 4L (assuming no other income source) can be booked tax-free. This has some nuances. For example, equity mutual funds have an additional Rs. 1.25L tax-free limit. To see how this works, see some examples (with Budget 2024 limits): How much capital gains tax should I pay if I have no other income source?
6 I am a fresher. If I am asked what my salary should be, should I state an amount just less than Rs. 12L?
Do you want to avoid tax or grow rich? Those who wish to grow rich have the right priorities. You should aspire to pay more and more tax each year! Stop taking WhatsApp forwards seriously!