New Tax Slab 2025: Many people have a question in their mind whether the tax exemption on income is on in-hand salary or on CTC. Let us know the answer to this question in simple language.
New Tax Slab 2025: Finance Minister Nirmala Sitharaman gave a big relief to the middle class working people during Budget 2025. She had announced that from now on there will be no income tax on annual income up to Rs 12 lakh in the country.
Apart from this, if you take advantage of standard deduction, then this limit increases to Rs 12.75 lakh. That is, even if your salary income is up to Rs 12.75 lakh, you will not have to pay any tax.
Now in such a situation, many people have a question in their mind whether the tax exemption on income is on in-hand salary or on CTC. Let us know the answer to this question in simple language.
In-hand salary or CTC
Let us tell you that tax exemption is not applicable on CTC (Cost to Company) but on in-hand salary. Actually, CTC includes many things like basic salary, allowances and other benefits, while in-hand salary is the amount that the employee finally gets directly in his account after deducting everything.
Understand it like this, if your CTC is Rs 14 lakh and your in-hand salary is Rs 12.75 lakh, then you can avail tax exemption. But if your in-hand salary exceeds this limit, then you will have to pay tax.
Exemption on income of Rs 12 lakh is available only to these people
It is important to understand here that this exemption is only for those people whose income comes mainly from salary. That is, they are employed. If your total income includes capital gains or income from other sources, then you may have to pay tax. Understand it like this, if a person’s total income is Rs 12 lakh, out of which Rs 8 lakh is salary and Rs 4 lakh is capital gain, then he will be able to avail tax exemption only on the salary amount. He will have to pay tax on capital gain.
