The recent Union Budget 2025 introduced a major tax relief under the new tax regime—increasing the tax rebate limit to ₹12 lakh under Section 87A. This means individuals earning up to ₹12 lakh will pay zero income tax.
Sounds like great news, right? Yes! But there’s a catch—this rebate only applies from FY 2025-26 (AY 2026-27). For FY 2024-25, the existing ₹7 lakh rebate remains unchanged.
Many taxpayers are already falling for misinformation and assuming they don’t need to pay taxes on incomes up to ₹12 lakh for this financial year (FY 2024-25). That’s not true!
At the same time, we’re at the crucial period where employees need to submit tax proofs for the current financial year (FY 2024-25) to avoid excess tax deductions. So, while you plan your taxes wisely for the coming years, don’t forget the immediate action required right now.
Don’t Be Misled: ₹12 Lakh Rebate Applies from FY 2025-26
Every year, tax changes announced in the Union Budget do not immediately apply to the ongoing financial year unless explicitly stated. They are implemented from the next financial year.
So, even though the ₹12 lakh rebate is a big win for middle-class taxpayers, it will only come into effect from FY 2025-26 (starting April 1, 2025).
Key takeaway: If you’re earning more than ₹7 lakh in FY 2024-25, you still have to pay income tax based on the current slabs. The ₹12 lakh rebate does NOT apply this year.
Understanding the Tax Rebate Under Section 87A
The government has increased the rebate limit under Section 87A from ₹7 lakh to ₹12 lakh (but only from FY 2025-26).
Here’s How It Works:
If your taxable income is up to ₹12 lakh in FY 2025-26, you pay zero tax under the new tax regime.
If your income is slightly above ₹12 lakh, you will still benefit from reduced tax slabs, resulting in lower tax outgo.
However, for FY 2024-25, the rebate limit remains ₹7 lakh under the new tax regime.
Comparison of Rebate Limits
| Financial Year | Rebate Limit (Under Section 87A) | Who Pays Zero Tax? |
|---|---|---|
| FY 2023-24 (AY 2024-25) | ₹7 lakh | Those earning up to ₹7 lakh |
| FY 2024-25 (AY 2025-26) | ₹7 lakh | Those earning up to ₹7 lakh |
| FY 2025-26 (AY 2026-27) | ₹12 lakh | Those earning up to ₹12 lakh |
Bottom line: If you’re filing your tax returns for FY 2024-25, you cannot claim the ₹12 lakh rebate yet. It will be applicable only from the next financial year.
Urgent: Submit Your Tax Proofs for FY 2024-25!
Right now, most companies are asking employees to submit tax-saving proofs for the current financial year (FY 2024-25). If you fail to do so, your employer will deduct excess tax (TDS) from your salary.
What You Need to Submit:
House Rent Allowance (HRA) receipts
Section 80C investments (LIC, PPF, ELSS, tuition fees, etc.)
Home Loan Interest Certificate
Medical insurance premiums (Section 80D)
National Pension Scheme (NPS) contributions
Deadline Alert: Employers usually set the last date for tax proof submission by February or March, so act now!
Failure to submit tax proofs can result in higher TDS deductions, which means a lower salary in the coming months.
Why You Shouldn’t Fall for Misinformation
Every year, social media is flooded with half-truths and misleading tax advice. Many people are already assuming that the ₹12 lakh rebate applies for FY 2024-25, which is completely false.
Common Myths Busted
“₹12 lakh income is tax-free in FY 2024-25.” – Wrong
The ₹12 lakh rebate is applicable only from FY 2025-26.
“I don’t need to submit tax proofs because I’m in the new tax regime.” – Yes
“I can switch to the new tax regime anytime.” – Wrong
Salaried employees can switch only at the start of the financial year.
What Should You Do Now?
Plan your taxes for FY 2025-26 correctly. Do not assume the ₹12 lakh rebate applies this year.
Submit your tax proofs for FY 2024-25 immediately to avoid unnecessary tax deductions.
Verify tax information from reliable sources—always check the official Income Tax Department website or consult a tax expert.
Avoid last-minute surprises—tax planning should be a year-long activity, not just a last-minute rush in March!
Final Takeaway
The ₹12 lakh tax rebate under the new tax regime is a game-changer, but remember—it is only applicable from FY 2025-26 (AY 2026-27).
For FY 2024-25, the tax rebate limit remains ₹7 lakh. If your income exceeds ₹7 lakh this year, you still have to pay tax.
Right now, the priority should be submitting tax proofs for FY 2023-24 to avoid excess tax deductions from your salary.
Spread the word and help others avoid tax mistakes!
Stox N Tax 
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