23 hrs ago

₹12.75 Lakh Tax-Free Limit Does Not Cover Capital Gains

Income up to ₹12.75 lakh? Know whether you pay zero tax on capital gains too under the new tax regime · livemint.com

The government has announced that some people will pay no regular income tax on income up to ₹12 lakh under the new tax system.

Salaried people may have a higher effective limit of ₹12.75 lakh because of the standard deduction.

This does not mean every type of income below that amount is tax-free.

Profits from selling shares or certain mutual funds are called capital gains.

These profits are taxed using separate rates instead of normal income-tax slabs.

Because of this, the Section 87A rebate usually cannot cancel the tax on those gains.

Short-term eligible equity gains are generally taxed at 20%.

Long-term eligible gains are generally taxed at 12.5% after a ₹1.25 lakh exemption.

Key facts

Normal-income limit: ₹12 lakh under the new tax regime
Salaried effective limit: ₹12.75 lakh after the ₹75,000 standard deduction
Relevant rebate: Section 87A
Short-term equity gains: Generally taxed at 20% under Section 111A when specified conditions are met
Long-term equity gains: Generally taxed at 12.5% under Section 112A
Long-term gain exemption: The first ₹1.25 lakh of eligible gains is exempt
Non-resident treatment: The 20% short-term-gains tax applies to the entire gain because non-residents cannot adjust normal-income shortfalls against the basic exemption limit for such gains

livemint.com · 23 hrs ago