Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How the 12 lakh works
You still fall in the slabs, but the Section 87A rebate cancels the resulting tax up to ₹12 lakh of taxable income. Salaried people also get the ₹75,000 standard deduction.
Who doesn't get it
The rebate applies to residents under the new regime only — NRIs are not eligible. Confirm current limits.
What 'up to 12 lakh' really covers
The ₹12 lakh figure is taxable income after the deductions the new regime still allows, not gross salary — so for a salaried person the ₹75,000 standard deduction means a salary of about ₹12.75 lakh can land at ₹12 lakh taxable and pay nothing. The mechanism is the Section 87A rebate, which cancels the tax the slabs would otherwise charge up to that level; it isn’t that the first ₹12 lakh is exempt for everyone. Cross ₹12 lakh of taxable income and the rebate falls away, but a marginal-relief rule softens the edge so a rupee over the line doesn’t create a large jump. Two limits matter. The rebate is only for residents, so an NRI — even with income under ₹12 lakh — doesn’t get it and pays per the slabs. And it applies to normal income, not to special-rate incomes like capital gains, which are taxed at their own rates regardless of the rebate. So someone with ₹10 lakh salary and ₹3 lakh of capital gains isn’t fully covered — the gains are taxed separately. Confirm the rebate limit for the year, since it has been raised over time.