Finance Bill 2025 Income Tax Calculations: In an important update about the Finance Bill 2025, Finance Minister Nirmala Sitharaman said in the Parliament today (March 25, 2025) that the bill would be presented during the monsoon session as it is being vetted by the Select Committee. The bill was introduced in the Parliament on February 13. The bill includes the proposed new tax regime, which promises significant changes in income tax slabs.
Under the proposed new tax regime, income up to Rs 12 lakh for non-salaried class individuals and income up to Rs 12.75 lakh for salaried-class individuals are tax-free.
But what if you are a salaried-class individual with an annual pay package of Rs 11 lakh and capital gains of Rs 1.75 lakh from mutual fund investments?
While it makes your overall income Rs 12.75 lakh. In this case, do you have to pay tax or not?
See what the rules says-
Proposed tax regime slabs
Let’s have a look at what the income tax slabs are for the proposed new tax regime.
As you can see, the tax rate for the Rs 8 lakh-Rs 12 lakh income range is 10 per cent, while it is 15 per cent for the Rs 12 lakh-Rs 16 lakh income range.
Why is Rs 12.75 lakh income tax-free?
As you can see, as per the tax slab rates, the tax liability on an income up to Rs 12.75 lakh is Rs 71, 250.
But the salaried-class individual gets a standard deduction of Rs 75,000 under Section 87A.
Under the same section, taxpayers are also eligible to get a tax rebate of up to Rs 60,000, which makes income up to Rs 12.75 lakh tax-free for a salaried-class individual.
Income tax on Rs 11 lakh income, Rs 1.75 lakh capital gains
Now, here is a situation where you are a salaried-class individual with an annual salary package of Rs 11 lakh.
Apart from that, you have also earned a Rs 1.75 lakh income from mutual fund long-term capital gains.
So, your income in the year is Rs 12.75 lakh. Will this income be tax-free? No! Know why!
Income tax on capital gains
Just read what Nirmala Sitharaman said in her Budget 2025 speech: “I am now happy to announce that there will be no income tax payable up to incomeof Rs 12 lakh (i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.”
It means capital gains come under a special rate and, hence, will not be included in tax-free income.
Income tax on Rs 11 lakh income, Rs 1.75 lakh capital gains
There will be no tax on Rs 11 lakh income, but on Rs 1.75 capital gains, 2 tax rates can apply in different scenarios.
Income tax if Rs 1.75 lakh is short term capital gain
In this case, a flat 20 per cent income tax rate will be applicable, so the total tax will be Rs 35,000.
Income tax if Rs 1.75 lakh is long term capital gain
In that case, there will be no tax on up to Rs 1,25,000 income. The taxable income will be Rs 50,000, on which a 12.5 per cent rate will be applicable. So, the tax amount will be Rs 6,250.
