Income Tax Slabs FY 2025-26 after Budget 2025: Finance Minister Nirmala Sitharaman’s massive announcement that taxpayers will not have to pay tax for income up to Rs 12 lakh from FY 2025-26 onwards has been met with cheer from the center class. This restrict is Rs 12.75 lakh for salaried taxpayers since they’ll avail the good thing about Rs 75,000 normal deduction.
The zero-tax income threshold has been elevated from Rs 7 lakh to Rs 12 lakh after rebate within the new income tax regime, excluding particular fee incomes (eg. capital good points). From April 1, 2025, people incomes up to Rs 12 lakh yearly can avail full income tax rebate below Section 87A, leading to zero tax legal responsibility.
Sitharaman additionally introduced a rise within the primary income exemption restrict to Rs 4 lakh from Rs 3 lakh below the brand new income tax regime.
Income Tax Return: Below Rs 12 lakh income – ITR wants to be filed?
The essential query within the minds of taxpayers is: do they nonetheless have to file their income tax returns if their income is below Rs 12 lakh?
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From the subsequent monetary yr, people incomes up to Rs 4 lakh yearly needn’t pay taxes or submit an income tax return (ITR).
- A clarification is required relating to
ITR filing necessities for these incomes between Rs 4 lakh and Rs 12 lakh, regardless of their zero tax legal responsibility. - Currently, for FY 2024-25, people incomes above Rs 3 lakh however below Rs 7 lakh within the new regime, and above Rs 2.5 lakh however below Rs 5 lakh within the outdated regime, should file ITRs to declare Section 87A rebate.
- Budget 2025 elevated the rebate quantity to Rs 60,000 from Rs 25,000 below the brand new regime.
CA Dr. Suresh Surana instructed ET, “The government provides relief to middle-class taxpayers by offering a rebate under Section 87A. This rebate allows individuals with income below the prescribed threshold to reduce their tax liability.”
So, it’s essential to be aware that ITR filing stays obligatory for claiming the improved rebate.
According to Abhishek Mundada, Partner, Dhruva Advisors, “Filing an ITR is compulsory if you want to claim the rebate available under Section 87A. Those earning more than Rs 4 lakh but under Rs 12 lakh will not automatically qualify for Section 87A rebate if they do not file their ITR starting next year.”
The Rs 60,000 rebate below the brand new regime excludes particular fee incomes like long-term or short-term capital good points.
Also Read | New vs outdated income tax regime after Budget 2025: Post income tax slab modifications, which tax regime is healthier for salaried center class taxpayers?
Below Rs 12 lakh income: What is the penalty for not filing an ITR?
For ITR filing for the subsequent monetary yr (2025-26), if a person incomes between Rs 4 lakh and Rs 12 lakh fails to file their ITR by the deadline, they might obtain a notification from the I-T Department relating to unpaid taxes.
“In response to this notice, the individual can claim the rebate available under Section 87A. However, there could be a penalty for non-filing of tax return suo-moto, i.e. on their own accord”, provides Mundada
CA Ashish Karundia notes that while assessing officers (AOs) beforehand had the ability to levy penalties below Section 271F for delayed tax return submissions, this was seldom applied.
“As a result, the legislature removed this penalty and introduced a system of late fees under Section 234F, effective from the Assessment Year 2018-19. This section now stipulates a late fee of Rs. 1,000 (where total income is up to Rs. 5 lakh) and Rs. 5,000 (where total income exceeds Rs. 5 lakh),” he provides.
For taxpayers required to submit ITR below Section 139 who miss the deadline, a further cost of 1% per thirty days or half thereof shall be utilized to the excellent quantity, after contemplating taxes already paid.
The curiosity calculation begins from the day following the due date and continues till both the return is filed or the evaluation is finalised, whichever happens first.
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Income below primary exemption restrict? Benefits of filing an ITR
Filing ITRs affords a number of benefits, even for people whose income falls below the fundamental exemption threshold. Although not legally mandated for such people, submitting a zero ITR (when income is below taxable restrict) could be useful.
Mundada states, “Filing ITRs, even if they are nil ITRs, serves as income and address proof. This can help taxpayers get loans from banks and NBFCs approved with relative ease. If you are looking to take a foreign trip, most consulates and embassies also demand your ITRs for processing your visa application. It is generally recommended that individuals file their ITRs on time.”
Filing Income Tax Returns Below Basic Exemption: Key Requirements
Individuals should submit ITRs in particular circumstances, even when their annual earnings fall below Rs 3 lakh below the brand new tax construction, Rs 2.5 lakh below the outdated construction, or Rs 4 lakh within the forthcoming fiscal yr’s tax framework. Section 139 of the Income Tax Act outlines these obligatory filing situations:
* Ownership or useful curiosity in abroad property
* Bank deposits exceeding Rs 1 crore in financial savings or present accounts inside a fiscal yr
* Foreign journey bills surpassing Rs 2 lakh in a single fiscal yr
* Electricity consumption prices above Rs 1 lakh in a fiscal yr
* Business turnover exceeding Rs 60 lakhs in a monetary yr
* Professional earnings (excluding specified enterprise) above Rs 10 lakhs in a monetary yr
* TDS/TCS exceeding Rs 25,000, with Rs 50,000 threshold for senior residents
Also Read | Income Tax Slabs FY 2025-26 defined: 20 FAQs particular person taxpayers ought to verify to perceive tax charges, income tax profit below new tax regime
