New Tax Slabs Unveiled: ₹12 Lakh I-T Rebate Explained and How Much Will You Pay if You Earn More?

Finance Minister Nirmala Sitharaman has given taxpayers a big reason to cheer in Budget 2025. The income tax rebate limit has been raised from Rs 7 lakh to Rs 12 lakh, effectively making income up to Rs 12 lakh tax-free under the new tax regime. But what does this really mean for different income groups? Let’s break it down.

No Tax for Income Up to Rs 12 Lakh

If your taxable income is Rs 12 lakh or less, you will have zero tax liability—a major relief for middle-class earners. This is a significant jump from the previous rebate limit of Rs 7 lakh.

What If You Earn More Than Rs 12 Lakh?

If your taxable income crosses Rs 12 lakh, even by a rupee, the rebate no longer applies. Instead, you’ll be taxed as per the new slab rates. For example:

If your income is Rs 12.1 lakh, your tax liability would be Rs 61,500.

If your income is Rs 15 lakh, you will pay Rs 1,05,000 in taxes.

New Tax Slabs : Lower Taxes for Higher Incomes

The FM has also restructured tax rates for those earning above Rs 15 lakh, leading to significant savings:

Rs 12 lakh - 16 lakh: 15% tax

Rs 16 lakh - 20 lakh: 20% tax

Rs 20 lakh - 24 lakh: 25% tax

Above Rs 24 lakh: 30% tax (same as before)

Earlier, any income above Rs 15 lakh was taxed at 30%, so this new structure brings substantial relief. For those earning above Rs 24 lakh, the FM estimates tax savings of up to Rs 1.1 lakh under the new tax regime.

This budget offers zero tax for incomes up to Rs 12 lakh and lower tax rates for incomes up to Rs 24 lakh, making it a win for both middle and upper-middle-class taxpayers. If you earn above Rs 12 lakh, it's time to rework your tax strategy and make the most of these new benefits!