return to news
  1. Upstox
    /
  2. News
    /
  3. Personal Finance News
    /
  4. Tax
    /
  5. No tax on ₹12 lakh salary from April 2025: 5 things salaried employees should know to end confusion

Personal Finance News

No tax on ₹12 lakh salary from April 2025: 5 things salaried employees should know to end confusion

rajeev kumar
By Rajeev Kumar

3 min read | Updated on April 02, 2025, 11:00 IST

Twitter Page
Linkedin Page
Whatsapp Page

SUMMARY

Salaried individuals will have to pay nil tax under the new regime if their taxable salary is up to ₹12 lakh. The deductions/exemptions available in the new regime include a standard deduction of ₹75,000 and the employer's contribution towards provident fund and national pension system accounts.

tax calculator

Taxable salary is different from full salary package. | Image source: Shutterstock

Starting from today (April 1, 2025), income up to ₹12 lakh has become tax-free under the new tax regime. This is as per the announcement by Finance Minister Nirmala Sitharaman in Budget 2025. However, the new rule is not without certain terms and conditions.

If you are a salaried individual, below are five things to know about the implications of this new rule proposed. These points will also help end certain confusions about the new rule.

Taxable salary is different from the full salary package

You pay tax on the taxable salary, not on your full salary package. The taxable salary is different from the full salary package or the total cost-to-company (CTC). And, it is calculated by reducing all available tax exemptions and deductions from the full pay package.

Benefit restricted to the new tax regime only, no change in the old regime
The benefit of not paying any tax on income up to ₹12 lakh is available only under the new tax regime. You can't avail this benefit under the old regime. Moreover, this benefit will not apply to income from assets for which special tax rates have been provided under the Income-tax Act, 1961.

Further, the new regime doesn't allow deductions against tax-saving investments. However, this facility is still available under the old regime.

It's possible to pay zero tax under the new regime even when the salary is over ₹12 lakh
You will have to pay nil tax under the new regime if your taxable salary is up to ₹12 lakh. The deductions/exemptions available in the new regime include a standard deduction of ₹75,000 and the employer's contribution towards provident fund and national pension system accounts. This means your full salary package can be more than ₹12 lakh, and still, you will have nil tax liability. (You may like to read this article, where we have explained how a salary up to ₹15 lakh can be tax-free under the new regime).
However, if your taxable salary is above ₹12 lakh, then you will have to pay tax as per the applicable tax slabs and rates.
New tax regime benefit will not help in ITR filing in July 2025

In July 2025, you will file returns for the income earned in the previous year, i.e. FY 2024-25. The new slab and rates announced in Budget 2025 will not help you in this.

The new slab and rates will be applicable on your salary between April 2025 and March 2025. They may help reduce the monthly tax deducted by your employer in FY 2025-26.

Use the income tax calculator to find out which regime will suit you best
As the new financial year 2025-26 begins, you will soon need to inform your employer about the choice of your tax regime or change what you had chosen in the previous year. To do this, you should compare both tax regimes and check which will help you save more. You can use our income tax calculator for this purpose.
Have a query related to the new tax regime in FY 2025-26? We will get them answered by experts. Write to rajeev.kumar@rksv.in
Upstox

About The Author

rajeev kumar
Rajeev Kumar is a Deputy Editor at Upstox, and covers personal finance stories. In over 11 years as a journalist, he has written over 2,000 articles on topics like income tax, mutual funds, credit cards, insurance, investing, savings, and pension. He has previously worked with organisations like 1% Club, The Financial Express, Zee Business and Hindustan Times.

Next Story