The biggest announcement of Budget 2025.. Making income of Rs 12 lakh tax free, has filled the common man with hope. If you also wanted to take advantage of this tax free income limit, then you will have to compulsorily accept one condition of the government.

The government has made income up to Rs 12 lakh tax-free only in the new tax regime. In such a situation, if you still fall under the purview of the old tax regime, then you will not get the benefit of this change. This means that to take advantage of tax-free income up to Rs 12 lakh, you will have to shift to the new tax regime.

What are the rules related to the new tax regime?

Now if you shift to the new tax regime, then you should know some rules related to it. The government has already made the new tax regime the default tax system. This means that if you do not choose the old tax regime at the beginning of the financial year, then you will automatically shift to the new tax regime.

Another provision of the new tax regime is that there is no option to return to it. This means that once you shift to the new tax regime, you will never be able to shift to the old tax regime again. In this way, if you shift to this regime to avail the benefit of tax-free income of Rs 12 lakh, then you will always have to pay tax accordingly.

Another important thing you have to keep in mind is that your income of Rs 12 lakh has become tax free, but the actual benefit will be Rs 12.75 lakh, because you will get the benefit of standard deduction of Rs 75,000.

Tax will be levied, but will not be collected.

There is another special thing about the income of Rs 12 lakh that the government has made tax-free in the new tax regime. The government has changed the slab of this tax system and now income up to Rs 4 lakh is tax-free. In such a situation, the slabs after that are 5% on 4 to 8 lakhs, 10% on 8 to 12 lakhs, 15% on 12 to 16 lakhs, 20% on 16 to 20 lakhs, 25% on 20 to 24 lakhs and 30% tax on income above 24 lakh rupees.

Out of this, the government will not collect the tax on your income up to 12 lakh rupees. Rather, you will be given a rebate of that amount under section 87A of the Income Tax Act.

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