How You Can Pay ZERO Income Tax on ₹12.75 Lakhs Salary in Tax Year 2025-26
Introduction The Finance Bill 2025 has reshaped the personal taxation landscape under the new regime by amending Section 115BAC and Section 87A, bringing welcome relief to middle-class salaried individuals. For Assessment Year 2026-27 (Tax Year 2025-26), individuals can effectively have zero tax liability up to a gross income of Rs. 12,75,000, thanks to a standard deduction of Rs. 75,000 and an enhanced rebate under Section 87A. Let’s decode how this works in simple terms, with detailed examples and a look at the rebate mechanism under both Clause (a) and Clause (b) of Section 87A. 1. What's Changed in Tax Rules for Tax Year 2025-26? Section 87A Amendment: Clause (a): Full rebate of up to Rs. 60,000 if taxable income does not exceed Rs. 12,00,000. Clause (b): Partial rebate continues as marginal relief if tax payable exceeds the income exceeding Rs. 12,00,000. Additional Proviso: Rebate cannot exceed the total tax payable. ...