Budget 2025: Even if your income is less than Rs 12 lakh, you may have to pay income tax if it includes special rate income.
Finance Minister Nirmala Sitharaman presented the budget for the financial year 2025-26 on Saturday. The middle class has been given a big relief in the budget. The government announced that no tax will be payable on income up to Rs 12 lakh. This tax exemption will be available under section 87A. This exemption will be available only to individual taxpayers. However, if a taxpayer’s income includes capital gains or income from lottery, then he will have to pay tax even if the income is up to Rs 12 lakh.
Let us tell you that the rebate under section 87A will not apply to special rate income. Long term capital gains, short term capital gains, income from lottery are considered special rate income. Budget 2025 has made it clear that income taxable at special rates will not get the benefit of income tax exemption under section 87A. This includes section 111A (short term capital gain), section 112 (long term capital gain), income from lottery etc.
Tax will have to be paid on capital gain income
Suppose your total income is Rs 12 lakh, out of which salary and other income is Rs 8 lakh, but capital gain income is Rs 4 lakh, then tax exemption under section 87A will be given only on Rs 8 lakh. Taxpayers will have to pay separate income tax on capital gain income of Rs 4 lakh.
Most taxpayers will get 87A benefit
According to tax experts, such situations happen with some taxpayers. People who have income only from salary will get the full benefit of rebate under section 87A.
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