ITR Filing 2025: Not Rs 12.75 Lakh, This is the Tax-Free Income for AY 2025-26; Check Details

ITR Filing 2025: Not Rs 12.75 Lakh, This is the Tax-Free Income for AY 2025-26; Check Details

March 6, 2025 By: sonimoney0 comments

As the Income Tax Return (ITR) filing season for Assessment Year (AY) 2025-26 approaches, many taxpayers are looking for clarity on the tax-free income limit. Contrary to the popular misconception that Rs 12.75 lakh is tax-free, the actual tax-free income for individuals depends on the tax regime chosen. Let’s break down the latest income tax slabs, exemptions, and deductions to help you maximize savings and file your returns correctly.

Understanding the Tax-Free Income Limit for AY 2025-26

For AY 2025-26 (FY 2024-25), taxpayers can choose between the new tax regime and the old tax regime, both offering different tax exemptions and deductions.

New Tax Regime (Default Option)

Under the new tax regime, taxpayers get a standard deduction of Rs 50,000, making the effective tax-free income Rs 7 lakh (including the Rs 3 lakh rebate under Section 87A). Here’s how it works:

• Income up to Rs 3 lakh → No tax
• Income from Rs 3 lakh to Rs 7 lakh → Covered under Section 87A rebate
• Standard deduction of Rs 50,000 → Further tax relief

Thus, under the new tax regime, Rs 7.5 lakh (Rs 7 lakh + Rs 50,000 standard deduction) is effectively tax-free.

Old Tax Regime (Optional)

The old tax regime provides multiple deductions such as 80C, 80D, HRA, home loan interest, and others. The tax-free income under this regime depends on eligible exemptions. Here’s a breakdown:

• Basic income exemption → Rs 2.5 lakh
• Standard deduction → Rs 50,000
• Rebate under Section 87A (for income up to Rs 5 lakh) → Zero tax liability
• Deductions like 80C (Rs 1.5 lakh), 80D (Rs 25,000), and home loan interest (Rs 2 lakh) → Can reduce taxable income further

With proper planning, salaried individuals can make their income up to Rs 10 lakh or more tax-free in the old tax regime using available deductions.

Which Tax Regime Should You Choose for ITR Filing 2025?

The choice between the old and new tax regimes depends on income structure, deductions, and tax-saving investments. The new tax regime is simpler but lacks deductions, while the old regime benefits those who claim tax exemptions.

For expert assistance in choosing the best tax regime and filing your ITR for AY 2025-26, consult our chartered accountant services in Mumbai to ensure hassle-free tax filing.

Important ITR Filing Deadlines for AY 2025-26

• For salaried individuals & non-audit cases → July 31, 2025
• For businesses requiring audit → October 31, 2025
• For taxpayers under transfer pricing regulations → November 30, 2025

Final Thoughts

While the tax-free income limit varies, smart tax planning can help maximize savings. Make sure to choose the right tax regime and file your ITR before the deadline to avoid penalties. Need expert guidance? Our chartered accountant services in Mumbai can help you with seamless tax filing and financial planning.

For more insights on income tax, ITR filing, and financial planning, stay tuned to SoniMoney World!