Income Tax Basic Exemption Limit —
How Much Income Is Tax-Free?
The basic exemption limit for FY 2025-26 (AY 2026-27) across the new and old regimes — for individuals, senior citizens, super-senior citizens, HUFs, NRIs and companies — plus how the Section 87A rebate makes income up to Rs12 lakh tax-free.
For FY 2025-26 (AY 2026-27) the new tax regime is the default. Its basic exemption (nil) slab is Rs4,00,000, but the Section 87A rebate makes tax nil up to Rs12,00,000 of taxable income for resident individuals — and with the Rs75,000 standard deduction, a salaried person pays zero tax up to about Rs12.75 lakh. Under the optional old regime the basic exemption is Rs2,50,000 (Rs3,00,000 for senior citizens aged 60-79, Rs5,00,000 for super-senior citizens aged 80+).
Basic Exemption Limit — All Categories
The basic exemption limit is the income up to which no income tax is payable. It applies only to individuals, HUFs and certain associations — not to companies or firms. Here is every taxpayer category for FY 2025-26.
| Taxpayer Category | Old Regime | New Regime (default) | Effective Zero-Tax Income |
|---|---|---|---|
| Individual (below 60) | Rs2,50,000 | Rs4,00,000 | Rs12L (87A) · Rs12.75L salary |
| Senior citizen (60-79) | Rs3,00,000 | Rs4,00,000 | Rs12L (87A) |
| Super-senior citizen (80+) | Rs5,00,000 | Rs4,00,000 | Rs12L (87A) |
| HUF (Hindu Undivided Family) | Rs2,50,000 | Rs4,00,000 | Rs12L (87A) |
| NRI / non-resident | Rs2,50,000 | Rs4,00,000 | No 87A rebate |
| Domestic company | No exemption | — | Tax from Re 1 |
| Partnership firm / LLP | No exemption | — | 30% from Re 1 |
87A rebate is available only to resident individuals; senior-citizen higher exemptions apply under the old regime only. Cess 4% and surcharge apply above the rebate/exemption.
The Rs4,00,000 figure is the nil slab where the 0% rate starts. The Rs12,00,000 figure is the level up to which the Section 87A rebate cancels the calculated tax entirely for resident individuals in the new regime. If your taxable income is even Re 1 above Rs12 lakh, the rebate is lost and tax is computed on the slabs from Rs4 lakh upwards (marginal relief limits the jump).
New Regime vs Old Regime — Which Frees More Income?
From AY 2026-27 the new regime under the Income-tax Act, 2025 is the default. It has a higher nil slab and a much larger 87A rebate, but no Chapter VI-A deductions (80C, 80D, HRA etc.). The old regime keeps a lower exemption but lets you claim those deductions.
New regime — zero tax up to Rs12L
- Nil slab: Rs4,00,000
- Section 87A rebate up to Rs12,00,000 taxable
- Standard deduction Rs75,000 (salaried)
- Zero tax up to ~Rs12.75L salary
- No 80C / 80D / HRA deductions
Old regime — deductions but lower exemption
- Basic exemption Rs2,50,000 (general)
- Rs3,00,000 senior · Rs5,00,000 super-senior
- Section 87A rebate up to Rs5,00,000 taxable
- Standard deduction Rs50,000 (salaried)
- 80C, 80D, HRA, home-loan interest allowed
New Regime Tax Slabs — AY 2026-27
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs4,00,000 | Nil |
| Rs4,00,001 – Rs8,00,000 | 5% |
| Rs8,00,001 – Rs12,00,000 | 10% |
| Rs12,00,001 – Rs16,00,000 | 15% |
| Rs16,00,001 – Rs20,00,000 | 20% |
| Rs20,00,001 – Rs24,00,000 | 25% |
| Above Rs24,00,000 | 30% |
Add 4% health & education cess. Surcharge applies at higher incomes (capped at 25% under the new regime). 87A rebate makes tax nil up to Rs12L taxable income.
Not sure which regime leaves more money in your pocket?
Compare Regimes →How the Exemption & Rebate Work — Rs12.75L Salary
A salaried resident individual with gross salary of Rs12,75,000 in FY 2025-26, choosing the default new regime:
New regime · salary Rs12,75,000
New regime · salary Rs16,00,000
Below Rs12 lakh taxable income the 87A rebate wipes out the tax; cross Rs12 lakh and tax is computed on the slabs, with marginal relief ensuring the extra tax never exceeds the income above Rs12 lakh.
The Section 87A rebate is available only to resident individuals. A non-resident (NRI) is taxed from the first slab above the nil band with no rebate — so an NRI with taxable income of Rs10 lakh pays tax even though a resident with the same income would pay nil. NRIs should also check the DTAA with their country of residence.
Want your exact tax computed for both regimes?
Use the Tax Calculator →Must You File ITR If Income Is Below the Exemption?
If your income is below the basic exemption limit, filing an income tax return is generally not mandatory — but several conditions still force a filing, and voluntary filing is often wise (to claim a TDS refund or build a financial record for loans and visas).
| Condition | ITR Filing Required? |
|---|---|
| Cash deposit over Rs1 crore in current accounts | Yes |
| Foreign travel spend over Rs2 lakh | Yes |
| Electricity bill over Rs1 lakh in the year | Yes |
| TDS/TCS deducted and you want a refund | Yes (to claim refund) |
| Foreign assets or foreign income | Yes (mandatory) |
| Loss to be carried forward | Yes (to claim) |
| Director or unlisted-share holder | Yes |
These conditions apply even when total income is below the basic exemption limit.
Basic Exemption — Recent Trend
How the new-regime zero-tax level has moved. For any past assessment year, always use that year's actual slabs.
| Financial Year | Old — General | Old — Senior | New Regime Zero-Tax |
|---|---|---|---|
| FY 2022-23 | Rs2,50,000 | Rs3,00,000 | Rs2,50,000 (nil slab) |
| FY 2023-24 | Rs2,50,000 | Rs3,00,000 | Rs7,00,000 (87A) |
| FY 2024-25 | Rs2,50,000 | Rs3,00,000 | Rs7,00,000 (87A) |
| FY 2025-26 | Rs2,50,000 | Rs3,00,000 | Rs12,00,000 (87A) |
FY 2025-26 = AY 2026-27. New-regime nil slab rose to Rs4L and the 87A zero-tax level to Rs12L under Budget 2025.
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