A ₹12 lakh salary pays ₹0 income tax under the new regime for FY 2025-26. After the ₹75,000 standard deduction, taxable income is ₹11,25,000 — within the ₹12 lakh Section 87A rebate limit, so the tax is fully cancelled.
Good news if you earn ₹12 lakh: under the new tax regime for FY 2025-26 you pay no income tax at all. The ₹75,000 standard deduction brings your taxable income to ₹11,25,000, and because that's within ₹12 lakh, the Section 87A rebate wipes out the tax entirely. Here's exactly how it works — and the one thing to watch if your salary creeps above ₹12.75 lakh.
| Gross salary | ₹12,00,000 |
| Standard deduction | − ₹75,000 |
| Taxable income | ₹11,25,000 |
| Tax as per slabs | ₹52,500 |
| Section 87A rebate | − ₹52,500 |
| Total income tax | ₹0 |
These figures use the new tax regime from Budget 2025 for FY 2025-26 (AY 2026-27): a ₹75,000 standard deduction for salaried taxpayers; slabs of nil up to ₹4 lakh, 5% (₹4–8L), 10% (₹8–12L), 15% (₹12–16L), 20% (₹16–20L), 25% (₹20–24L) and 30% above ₹24 lakh; a 4% health & education cess; and a Section 87A rebate that makes taxable income up to ₹12 lakh fully tax-free. The old regime can still be cheaper if you claim large deductions (80C, 80D, HRA, home-loan interest) — as a rough rule it only wins once your total deductions cross about ₹4–5 lakh. Use the interactive income tax calculator to compare both regimes for your exact numbers.
Under the new regime for FY 2025-26, a ₹12 lakh salary pays ₹0 income tax. The ₹75,000 standard deduction cuts taxable income to ₹11,25,000, within the ₹12 lakh Section 87A rebate limit.
Yes. Under the new regime a salary up to ₹12.75 lakh is effectively tax-free, thanks to the ₹75,000 standard deduction plus the Section 87A rebate on income up to ₹12 lakh — so ₹12 lakh pays nothing.
For most people at ₹12 lakh with ordinary deductions, the new regime is cheaper and simpler. The old regime only wins if you can claim large deductions — typically over ₹4–5 lakh combined (full 80C, 80D, HRA and home-loan interest). Compare both with the income tax calculator before you declare.