The income tax rebate in Budget 2025 has caused some confusion, especially since income tax slabs still show taxes for income brackets from ₹0 to ₹12 lakh.
However, this has caused some confusion, especially since the income tax slabs still show taxes for income brackets from ₹0 to ₹12 lakh.
Let’s decode how the income tax relief for those earning up to ₹12 lakh works:
Revised tax slabs
0 – 4 lakh: No tax
₹4 – ₹8 lakh: 5% tax
₹8 – ₹12 lakh: 10% tax
₹12 – 16 lakh: 15% tax
16 – 20 lakh: 20% tax
20 – 24 lakh: 25% tax
Above 24 lakh: 30% tax
Earlier tax slab (for FY 2024-25)
Up to ₹3 lakh – No tax
₹3 lakh – ₹7 lakh 5%
₹7 lakh – ₹10 lakh 10%
₹10 lakh – ₹12 lakh 15%
₹12 lakh – ₹15 lakh 20%
Above ₹15 lakh 30%
The rebate that makes income up to ₹12 lakh tax-free
The confusion arises because the new structure offers a tax rebate, which effectively cancels out the tax payable for individuals earning up to ₹12 lakh. The new structure does not categorically mention zero tax till ₹12 lakh income. Here’s how it works:
