If you’re filing your Income Tax Return (ITR) this year, you might be wondering: Will tax be waived if your income is below ₹12 lakh? The good news is, thanks to significant updates announced in the Union Budget 2025, many taxpayers will benefit from new tax rebates and deductions, potentially reducing their tax liability to zero. But there’s more to it—understanding when you still need to file ITR, how the rebates apply, and how it impacts salaried and non-salaried individuals is crucial.
In this article, we’ll break down everything you need to know in simple terms, supported by accurate data, official resources, and expert insights. Whether you’re a seasoned professional or just starting to file taxes, this guide will help you navigate the process confidently.
ITR Filing Income Less Than ₹12 Lakh in 2025
| Key Points | Details |
|---|---|
| New Tax Rebate (Section 87A) | Increased to ₹60,000; effectively waives tax liability for incomes up to ₹12 lakh under new regime. |
| Standard Deduction (Salaried) | Raised from ₹50,000 to ₹75,000; helps salaried individuals earning up to ₹12.75 lakh reduce tax liability to zero. |
| Basic Exemption Limit (New Regime) | Increased to ₹4 lakh. |
| ITR Filing Mandatory? | Yes, if income exceeds ₹4 lakh—even if final tax payable is nil after rebate. |
| Applicable Tax Regime | Applies to the New Tax Regime introduced in Budget 2025. |
| Penalty for Not Filing | Penalties applicable if eligible individuals fail to file ITR. |
| Ideal for Professionals, Salaried, Freelancers, Pensioners | All income-earning individuals must check their eligibility and file accordingly. |
To sum up, taxpayers earning up to ₹12 lakh (or ₹12.75 lakh for salaried) can now enjoy zero tax liability under the New Tax Regime, thanks to the enhanced Section 87A rebate and higher standard deduction. However, it’s crucial to remember that filing your ITR is still mandatory if your income crosses ₹4 lakh, regardless of whether your final tax payable is zero.
Understanding the Tax Waiver: What Changed in Budget 2025?
The Union Budget 2025 introduced some of the biggest updates to India’s income tax structure under the New Tax Regime. One of the headline changes is the enhanced rebate under Section 87A. Previously, this rebate was ₹25,000, but it has now been increased to ₹60,000.
What Does This Mean?
If your total taxable income is up to ₹12 lakh, you are eligible for a rebate that brings your final tax liability down to zero.
For salaried individuals, an additional benefit comes in the form of an increased standard deduction—raised from ₹50,000 to ₹75,000. This means if you earn up to ₹12.75 lakh annually, you can avail of the standard deduction and still end up paying no tax.
Important: These benefits are applicable only if you choose the New Tax Regime, which has lower tax rates but fewer exemptions compared to the old regime.
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How Does the Rebate Work?
Let’s simplify:
- Income up to ₹12 lakh → Tax liability = Nil (after rebate).
- Income up to ₹12.75 lakh (salaried) → Tax liability = Nil (after standard deduction + rebate).
Example Breakdown:
| Particulars | Amount (₹) |
|---|---|
| Gross Income | ₹12,75,000 |
| Standard Deduction | ₹75,000 |
| Taxable Income | ₹12,00,000 |
| Tax Calculated (as per slabs) | ₹60,000 |
| Section 87A Rebate | ₹60,000 |
| Net Tax Payable | Zero |
Do You Still Need to File ITR?
Yes. Even if your tax payable is nil due to rebates and deductions, ITR filing is mandatory if:
- Your gross total income exceeds ₹4 lakh under the New Tax Regime.
- You want to claim refunds for TDS (Tax Deducted at Source).
- You have financial goals like applying for loans, credit cards, or visas, where income proof via ITR is essential.
Failure to file your ITR can result in penalties, starting from ₹1,000 to ₹5,000 depending on delays and income slabs.
Step-by-Step Guide: Filing ITR Under the New Regime
Here’s a clear, actionable process:
Step 1: Determine Your Income Source
- Salaried? Collect Form 16 from your employer.
- Freelancer/Business? Summarize income and expenses.
- Pensioner? Check pension statements.
Step 2: Choose Tax Regime
Opt for New Regime to avail the ₹12 lakh rebate and standard deduction benefits.
Step 3: Gather Necessary Documents
- PAN Card
- Aadhaar Card
- Form 16/16A
- Bank statements
- Investment proofs (if any)
Step 4: Calculate Total Income
Include salary, business income, interest, or capital gains.
Step 5: Apply Standard Deduction (if salaried)
Deduct ₹75,000.
Step 6: Compute Tax Liability
Refer to new slab rates, calculate tax, and apply Section 87A rebate.
Step 7: File ITR
Use the official Income Tax India e-filing portal to submit your return.
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Tax Slabs Under New Regime (2025-26)
| Income Slab (₹) | Tax Rate |
|---|---|
| 0 – 4,00,000 | Nil |
| 4,00,001 – 6,00,000 | 5% |
| 6,00,001 – 9,00,000 | 10% |
| 9,00,001 – 12,00,000 | 15% |
| Above 12,00,000 | 20% |
ITR Filing Income Less Than ₹12 Lakh in 2025 FAQs
1. Is tax completely waived for income up to ₹12 lakh?
Yes, under the New Tax Regime, with the enhanced Section 87A rebate, tax is effectively zero for incomes up to ₹12 lakh.
2. Do salaried individuals earning ₹12.75 lakh need to pay tax?
No. After applying the ₹75,000 standard deduction, their taxable income reduces to ₹12 lakh, making them eligible for full rebate.
3. Is ITR filing compulsory if I earn ₹6 lakh but have no tax liability?
Yes, if your gross income exceeds ₹4 lakh, you must file ITR—even if no tax is payable after rebate.
4. Does this apply under the old tax regime?
No. These benefits are specific to the New Tax Regime introduced in Budget 2025.
5. What happens if I don’t file my ITR despite zero tax?
Penalties ranging from ₹1,000 to ₹5,000 can be imposed. Also, you may miss out on loan approvals and refund claims.
