Income up to ₹12.75 lakh is tax free, but there is no relief on income from shares-gold, Know why

In the new tax regime, the tax exemption under section 87A does not apply to special income like short term capital gain (STCG). The Finance Minister had announced this in Budget 2025. The exemption has been increased to Rs 60000 for people with taxable income up to Rs 12 lakh. This exemption applies only to slab-rate income.

New Delhi. In the new tax regime, the tax exemption under Section 87A does not apply to special income like short term capital gain (STCG). Therefore, even if your salary income is less than Rs 12.75 lakh, your STCG will not get any benefit of tax exemption under Section 87A and will be taxed at the special rate applicable on it.

This change in the rule of Section 87A tax exemption was announced by the Finance Minister in Budget 2025 and is applicable from the beginning of the financial year 2025-26.

Understand what STCG is

STCG refers to the profit earned from selling capital assets held for less than 24 months (or 12 months for listed equity shares and equity-oriented mutual funds). These assets include shares, gold, debt mutual funds, bonds and other movable properties.

When do salaried taxpayers get tax exemption under Section 87A?

New Tax Regime – Under the new tax regime, the exemption has been increased to Rs 60,000 for residential individuals with taxable income up to Rs 12 lakh. But taxable income falling under special rates (STCG under 111A, LTCG under 112) will not be eligible for exemption under Section 87A. This exemption applies only to slab-rate income up to Rs 12 lakh.

Old Tax Regime – Under the old tax regime, the tax exemption will be the same as in FY 2024-25. That is, Rs 12,500 on total taxable income (including STCG) up to Rs 5 lakh.

Benefit of standard deduction of Rs 75,000

To reduce the tax burden, the Finance Act, 2025 has increased the tax exemption under Section 87A, increasing the tax-free limit from Rs 7 lakh to Rs 12 lakh. As a result, the tax liability on income up to Rs 12 lakh has become zero.

A standard deduction of Rs 75,000 can also be claimed. This takes the total tax-free income to Rs 12.75 lakh.

The post Income up to ₹12.75 lakh is tax free, but there is no relief on income from shares-gold, Know why first appeared on informalnewz.

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