New Delhi, Sept. 13 -- In the Union Budget for 2025-26, Finance Minister Nirmala Sitharaman announced that from financial year 2026-27, individuals earning up to Rs.12 lakh a year would pay no income tax under the new tax regime.

For salaried taxpayers, this effective zero-tax threshold rises to Rs.12.75 lakh after factoring in the standard deduction. While tax is still calculated according to an individual's tax slab rates, the rebate under Section 87A of the new regime offsets the liability up to the eligible income limit.

This means even though the tax on Rs.12 lakh income would be Rs.60,000, taxpayers do not actually pay it because of the rebate. However, capital gains are treated differently and profits from equity-oriented mutual ...