Budget 2025: Salary of up to 12 lakh will not be tax free under new governance in these cases – CNBC TV18

Many taxpayers had expected to become tax-free income of up to ₹ 12 lakh under a change in budget 2025. However, not all cases are eligible for zero tax. Special rate income, such as capital gains, does not get the benefit of Section 87A exemption.

Section 87a how works

Under the new tax regime, individuals earning up to 12 lakhs can claim a complete tax exemption under Section 87A.

It effectively makes income tax-free for salaried individuals, considering ₹ 75,000 standard deduction.

When you still have to pay tax

If your income part is taxed at special rates, the discount will not cover that part.

Example 1: short term capital gains

Suppose your total income is ₹ 12 lakh:

• It comes from ₹ 8 lakh salary and other sources.
• A short -term capital gain (STCG) comes from ₹ 4 lakh shares or mutual funds.

In this case, Section 87A exemption applies only to 8 lakh pay income. However, ₹ 4 lakh STCG is taxed separately at 20%, which means that you will pay ₹ 80,000 in taxes.

Example 2: Long -term capital gains

If ₹ 4 lakh income is from long -term capital gains (LTCG) on listed equity:

The first is exempted from ₹ 1.25 lakh.

The remaining ₹ 2.75 lakh is taxed at 12.5%tax, resulting in ₹ 34,375 tax.

key takeaways

Under Section 87A, a salary of up to 12 lakhs is tax-free, but special rate income is excluded.

Small -term capital gains are taxed at 20%, and after exemption, equity is imposed 12.5% ​​tax on long -term capital gains.

Taxpayers earning capital benefits should be planned accordingly, as they will not get full exemption.

While the new tax governance provides relief to salaried taxpayers, those earning through investment should be aware of these exclusion.