New Income Tax Slab: Finance Minister Nirmala Sitharaman made a big announcement for the middle class and the salaried class in the budget 2025-26. He announced that now those who earn Rs 12 lakh annually do not need to pay a single rupee tax. Whereas, those who work and receive a salary will not have to pay any tax on the annual income of 12 lakh 75 thousand.
But, on the other hand, when we look at the new tax slabs issued, it says that up to Rs 4 lakh: 0% tax, from Rs 4 lakh to Rs 8 lakh: 5% tax, from Rs 8 lakh to Rs 12 lakh: 10% tax, from Rs 12 lakh to Rs 16 lakh: 15% tax, from Rs 16 lakh to Rs 20 lakh: 20% tax, from Rs 20 lakh to Rs 24 lakh: 25% tax and 30% tax on annual income above Rs 24 lakh.
Now many people on social media are asking the question that when there is no tax on income of 12 lakh per annum, then 5 per cent tax on 4 to 8 lakh and 10 per cent tax on income of 8 to 12 lakh is being shown. Let’s explain in detail what this majra is and how you should look at it.
The whole game is about tax exemption
In fact, the government has made provision for exemption under Section 87A of the Income Tax Act. This means that if your total income is taxed by calculating according to any slab, you will get some discount on it. For example, if your annual income is between Rs 4 to 8 lakh, you will be taxed at Rs 20,000.
At the same time, if you earn 8 to 12 lakhs in a year, then you will be taxed Rs 40,000. In this way, a total tax of Rs 60,000 is levied. But under Section 87A, the tax exemption from the annual income of Rs 12 lakh has now been increased to Rs 60 lakh. That is, now whether you earn 4 to 8 lakhs or 8 lakhs to 12 lakhs annually, you do not need to pay a single rupee tax.
What is tax exemption?
Tax exemption is an essential financial provision that gives taxpayers tax relief on their income. This provision applies specifically to persons whose annual income is less than a certain threshold. In India, this provision comes under section 87A of the Income Tax Act.
There is a difference between tax exemption and exemption tax exemption: this applies directly to your income and up to certain income levels you are fully exempt from tax. Tax exemption: This applies when your income exceeds a certain threshold, but you can still waive some amount. Because now it will be on an income of up to 12 lakhs.