You Earned Rs 12 Lakh In A Year. Here's Exactly How Much Tax You Owe Under Both Regimes

Tax season is one of the most daunting times of the year for many working citizens. Tax liabilities can quickly eat into your income and leave you with far less money than you would like. However, the new income tax regime offers significant relief for salaried taxpayers earning Rs 12 lakh annually.Thanks to the enhanced Section 87A rebate and a higher standard deduction, individuals with an annual income of Rs 12 lakh can reduce their tax liability to zero under the new regime.The revised tax structure aims to simplify taxation while leaving more income in the hands of taxpayers. As a result, many middle-income earners may find the new regime more attractive than the traditional tax system.Read this article below to know how much tax you owe under both regimes.How Tax Is Calculated Under the New RegimeUnder the new tax regime, salaried individuals can claim a standard deduction of Rs 75,000, reducing their taxable income to Rs 11.25 lakh.Gross Income: Rs 12,00,000&amp;nbsp;Standard Deduction: Rs 75,000&amp;nbsp;Taxable Income: Rs 11,25,000&amp;nbsp;Tax on Slabs: Rs 52,500 (Up to Rs 4 Lakh: NIL, Rs 4&ndash;8 Lakh: Rs 20,000, Rs 8&ndash;11.25 Lakh: Rs 32,500)&amp;nbsp;Section 87A Rebate: Rs 52,500&amp;nbsp;Net Tax Payable: Rs 0 (Since the tax liability remains within the enhanced Section 87A rebate limit of Rs 60,000, the entire amount is offset.)ALSO READ: Got Form 16 From Your Employer? Check These Key Details Before Filing Your ITR This YearWhat Happens Under the Old Tax Regime?The old tax regime continues to offer a wide range of deductions, including benefits under Sections 80C and 80D, as well as exemptions such as House Rent Allowance (HRA). However, taxpayers who do not make substantial tax-saving investments may face a considerably higher tax bill.Income Details:&amp;nbsp;Gross Income: Rs 12,00,000&amp;nbsp;Standard Deduction: Rs 50,000&amp;nbsp;Taxable Income: Rs 11,50,000 (without investments like PF, ELSS, insurance, etc.)&amp;nbsp;Tax Calculation:&amp;nbsp;Income Tax Calculation: Rs 12,500 + Rs 1,00,000 + Rs 45,000 = Rs 1,57,500 (Up to Rs 2.5 lakh: Nil, Rs 2.5 lakh to Rs 5 lakh (at 5%): Rs 12,500, Rs 5 lakh to Rs 10 lakh (at 20%): Rs. 1,00,000, Above Rs 10 lakh (at 30%): Rs 45,000)Health &amp;amp; Education Cess (4%): Rs 6,300&amp;nbsp;Net Tax Payable: 1,63,800ALSO READ: ITR Filing 2026: Key Changes Taxpayers Must Know Before Filing ReturnsNew vs Old Tax Regime: Which Is Better?For most salaried individuals earning Rs 12 lakh annually, the new tax regime emerges as the more beneficial option. It has lower tax rates, a larger standard deduction, and the higher Section 87A rebate reduces your tax liability to zero.The old regime, on the other hand, becomes advantageous only when taxpayers claim various deductions from the total income. However, it still does not make your tax burden zero on a 12 lakh income.

You Earned Rs 12 Lakh In A Year. Here's Exactly How Much Tax You Owe Under Both Regimes

Individuals with an annual income of Rs 12 lakh can reduce their tax liability to zero under the new regime.

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