Income Tax on Rs. 12 Lakh Salary

If your annual salary is Rs. 12 lakh, smart tax planning can significantly reduce your liability. For FY 2024-25 (AY 2025-26), you fall under the 20% tax slab, but deductions like Section 80C (Rs. 1.5 lakh for investments in PPF, ELSS, NPS, or insurance), Section 80D (Rs. 25K-75K for health insurance), HRA/House Loan benefits (if applicable), and the Rs. 50K standard deduction can lower taxable income. Additionally, NPS contributions up to Rs. 50K (80CCD(1B)) offer extra savings. For FY 2025-26 (AY 2026-27), stay updated on any new tax reforms or slab changes. Start early investments, optimise deductions, and consult a tax advisor to maximise savings legally.
Income Tax on Rs. 12 Lakh Salary
2 min read
19 January 2024

The tax structure in India undergoes periodic changes and being well informed can help you optimise your tax liability. Read on to understand the income tax slabs, deductions, and exemptions applicable to those with an annual income of Rs. 12 lakh, exploring both the new and old tax regimes.

Income tax slabs under the new tax regime for FY 2025-26 (AY 2026-27)

In the 2025 Budget, the government introduced updated income tax slabs under the new tax regime. The revised structure increases slab ranges to Rs. 4 lakh intervals, and a 25% tax rate was added. These changes aim to simplify taxation while maintaining clarity across different income brackets for FY 2025–26 (AY 2026–27).

Annual income

Income tax rate

Up to Rs. 2.5 lakh

Nil

Rs. 2.5 lakh – Rs. 4 lakh

Nil

Rs. 4 lakh – Rs. 5 lakh

5%

Rs. 5 lakh – Rs. 8 lakh

5%

Rs. 8 lakh – Rs. 10 lakh

10%

Rs. 10 lakh – Rs. 12 lakh

10%

Rs. 12 lakh – Rs. 16 lakh

15%

Rs. 16 lakh - Rs. 20 lakh

20%

Rs. 20 lakh - Rs. 24 lakh

25%

More than Rs. 24 lakh

30%

 

Comparison of old vs. new income tax slabs as per Union Budget 2025

The Union Budget 2025 has introduced major tax relief for individuals, with a rebate ensuring zero tax liability for income up to Rs.12 lakh under the new tax regime. This revision significantly reduces the tax burden for middle-class taxpayers.

Income tax slabs: Old vs. new regime for FY 2024-25 (AY 2025-26)

Income slab (Rs.)

Old regime tax rate

New regime tax rate (2025)

Up to Rs.2.5 lakh

Nil

Nil

Rs.2.5 lakh – Rs.4 lakh

5%

Nil

Rs.4 lakh – Rs.8 lakh

5%

5%

Rs.8 lakh – Rs.12 lakh

20%

10%

Rs.2 lakh – Rs.16 lakh

30%

15%

Rs.16 lakh – Rs.20 lakh

30%

20%

Rs.20 lakh – Rs.24 lakh

30%

25%

Above Rs.24 lakh

30%

30%

 

Key changes in Budget 2025

The Budget 2025 brought several taxpayer-friendly updates. Firstly, no tax is payable on incomes up to Rs. 12 lakh, thanks to an enhanced rebate under Section 87A. Secondly, tax rates have been reduced for incomes between Rs. 12 lakh and Rs. 24 lakh. Thirdly, while the old regime remains unchanged, it still allows deductions such as 80C and HRA. Note that the new regime restricts many of these traditional exemptions.

Tax saving options under new and old tax regime

Below is a comparative overview of tax-saving opportunities available under the old and new tax regimes:

New tax regime – Allowed deductions

Although limited, certain deductions are still available under the new system:

Deduction type

Details

Standard deduction

Rs. 75,000

Employer’s NPS contribution

Allowed under Section 80CCD(2)

Agniveer Corpus Fund

Deduction under Section 80CCH

Family pension

Deduction as per Section 57(iia)

Conveyance and transport allowance

Applicable, especially for specially-abled individuals

Gratuity and leave encashment

Exempt under Sections 10(10), 10(10AA), 10(10C)

Interest on home loan (Let-out Property)

Deduction allowed under Section 24

Old tax regime – Exemptions and deductions

The old regime offers a wider variety of tax-saving tools, grouped into two categories:

Part A: Benefits under 'Salary'

Component

Tax treatment

Basic and DA

Fully taxable

HRA

Partially exempt (subject to limits)

LTA

Exempt twice in a four-year block

Internet/Mobile reimbursement

Exempt with valid bills

Children's education allowance

Rs. 4,800 annually (up to 2 children)

Food coupons

Up to Rs. 26,400 yearly

Professional tax

Usually Rs. 2,400

Standard deduction

Rs. 50,000

Part B: Deductions under Chapter VI-A

Section

Deduction

80C

Up to Rs. 1.5 lakh (EPF, PPF, ELSS, SSY, NSC, etc.)

80D

Rs. 25,000–50,000 (health insurance)

80E

Interest on education loans (up to 8 years)

80G

Donations to approved charities (50% or 100%)

80DD

Rs. 75,000–1.25 lakh (for disabled dependents)

Section 24(b)

Up to Rs. 2 lakh (home loan interest)

How to save taxes for Rs. 12 lakh salary?

Whether you go with the old or the new tax regime, understanding your tax-saving opportunities can make a noticeable difference. Here’s a breakdown of common strategies to reduce your tax liability:

1. Make use of the standard deduction

This is the simplest and most widely used deduction available to salaried individuals.

  • Under the new regime, the standard deduction is Rs. 75,000.

  • Under the old regime, it is Rs. 50,000.

You don’t need to provide any investment proof—this deduction is applied automatically.

2. Choose the more beneficial regime

  • In the old regime, income up to Rs. 2.5 lakh is tax-free.

  • In the new regime, the tax-free threshold is Rs. 3 lakh.

The old regime allows a wider range of deductions (like 80C, 80D, etc.), while the new one offers simpler slab rates with fewer benefits.
Compare both using an online tax calculator based on your actual investments and expenses to see which regime offers lower tax.

3. Claim deduction for employer’s contribution to NPS – Section 80CCD(2)

This benefit is available under both regimes.

Employer type

Old regime

New regime

Government

14% of (Basic + DA)

14% of (Basic + DA)

Private

Not available

14% of (Basic + DA)

4. Exemption on gifts received

If you’ve received gifts (in cash or kind), these are tax-exempt up to Rs. 50,000 per financial year. Any amount above that becomes fully taxable. This applies under both regimes.

5. Interest deduction for let-out property – Section 24

If you have rented out a property and are paying interest on a loan taken for it, you can claim this interest as a deduction. There's no upper limit for this benefit, and it is available under both regimes. Planning on investing in property for your tax planning? Check your eligibility for a home loan from Bajaj Finserv using your mobile number and OTP for verification.

6. Gratuity and leave encashment

Tax exemption is available on gratuity and leave encashment received at retirement or upon leaving employment. This applies to both tax regimes.

7. Deduction for additional employee costs – Section 80JJA

Businesses can claim 30% of additional employee costs as a deduction, regardless of the tax regime selected.

8. Deduction for Agniveer Corpus Fund – Section 80CCH(2)

Eligible Agniveers under the Agnipath Scheme can claim the full amount contributed by the Central Government as a deduction. No cap is applied, and it is applicable under both regimes.

Rs. 12 lakh income tax calculation in old and new tax regime

Let’s understand how taxes are calculated for a gross salary of Rs. 12 lakh in FY 2025–26 under both tax regimes. Suppose Mr A receives an HRA exemption of Rs. 60,000, LTA exemption of Rs. 20,000, and pays Rs. 2,400 as professional tax. He also invests Rs. 1.5 lakh in PPF, pays Rs. 50,000 for his senior citizen parents’ health insurance, and pays Rs. 25,000 towards education loan interest.

Particulars

Old tax regime

New tax regime

Gross Salary

Rs. 12,00,000

Rs. 12,00,000

HRA Exemption

Rs. 60,000

NA

LTA Exemption

Rs. 20,000

NA

Standard Deduction

Rs. 50,000

Rs. 75,000

Professional Tax

Rs. 2,400

NA

Income after Deductions

Rs. 10,67,600

Rs. 11,25,000

Section 80C Deduction

Rs. 1,50,000

NA

Section 80D Deduction

Rs. 50,000

NA

Section 80E Deduction

Rs. 25,000

NA

Net Taxable Income

Rs. 8,42,600

Rs. 11,25,000

Tax Before Rebate

Rs. 84,261

Rs. 52,500

Rebate under 87A

NA

Rs. 52,500

Final Tax Payable

Rs. 84,261

Rs. 0

Conclusion: Choosing the new tax regime in this case results in zero tax liability, saving Rs. 84,261.

Tax computation for FY 2024-25 under the old and new tax regime

Here’s a similar calculation using income figures for the previous financial year (FY 2024–25), keeping exemptions and deductions the same as in the previous example.

Particulars

Old tax regime

New tax regime

Gross Salary

Rs. 12,00,000

Rs. 12,00,000

HRA Exemption

Rs. 60,000

NA

LTA Exemption

Rs. 20,000

NA

Standard Deduction

Rs. 50,000

Rs. 75,000

Professional Tax

Rs. 2,400

NA

Income after Deductions

Rs. 10,67,600

Rs. 11,25,000

Section 80C Deduction

Rs. 1,50,000

NA

Section 80D Deduction

Rs. 50,000

NA

Section 80E Deduction

Rs. 25,000

NA

Net Taxable Income

Rs. 8,42,600

Rs. 11,25,000

Tax Before Rebate

Rs. 84,261

Rs. 71,500

Rebate under 87A

NA

NA

Final Tax Payable

Rs. 84,261

Rs. 71,500

Conclusion: In this case, the new tax regime still results in a lower tax payable, even without any deductions.

Income tax slabs for FY 2023-24 (old tax regime)

Income range (Rs.)

Tax rate

Up to Rs. 2.5 lakh

Nil

Rs. 2,50,001 - Rs. 5,00,000

5%

Rs. 5,00,001 - Rs. 10,00,000

20%

Rs. 10,00,001 and above

30%

For individuals earning Rs. 12 lakh or more, the old tax regime may still be beneficial due to higher deduction options.

Deductions and exemptions under the new tax regime

Unlike the old regime, the new tax regime has limited deductions. Below are the key tax-saving options available under the new tax regime:

 

  1. Standard Deduction: A flat deduction of ₹50,000 for salaried and pensioned individuals under Standard deduction.
  2. Deductions under Section 80CCD (2): Employer’s contribution to National Pension Scheme (NPS) can be claimed under Section 80CCD (2).
  3. No Exemptions for Allowances: Perks like House Rent Allowance (HRA), Leave Travel Allowance (LTA), and deductions under Section 80C (like PF contributions, life insurance, etc.) are not available.
  4. No exemptions for transport and medical allowances: Unlike the old regime, these deductions are removed.

 

Minimum deductions required if income exceeds Rs. 12 lakh

For taxpayers with an income above Rs. 12 lakh, maximizing deductions is crucial. Here are some key deduction options under the old tax regime:

  1. Section 80C Deductions: Investments in EPF, PPF, ELSS, NSC, Life Insurance Premiums, etc.
  2. Home Loan Interest (Section 24(b)): Deduction on home loan interest paid. You might already be eligible for favourable terms on a home loan – check your loan offers from Bajaj Finserv by entering your mobile number and OTP.

  3. Health Insurance Premiums (Section 80D): Tax benefit on health insurance for self, spouse, children, and parents.
  4. National Pension Scheme (Section 80CCD): Additional deduction for individual contributions.
  5. Education Loan Interest (Section 80E): Deduction for education loan interest.
  6. Standard Deduction: Rs. 50,000 deduction for salaried individuals.

Comparison of Tax Liability: Old vs. New Regime

Description

Amount (Rs.)

Old regime (Rs.)

New regime (Rs.)

Income

12,50,000

12,50,000

12,50,000

Standard deduction

50,000

50,000

50,000

Professional tax

2,400

2,400

Gross total income

11,97,600

11,97,600

12,00,000

Less: Deduction u/s 80C

1,50,000

1,50,000

Total Taxable Income

10,47,600

10,47,600

12,00,000

Income Tax Payable

1,26,780

90,000

Education Cess (4%)

5,071

3,600

Total Tax

1,31,851

93,600?

 
Which tax regime is better?
  • If you have significant deductions and exemptions, the old tax regime could be more beneficial.
  • If you do not claim many deductions, the new tax regime provides a lower tax rate and simpler filings

How to calculate income tax on different salary slabs

For better understanding, taxpayers can calculate tax liability based on different salary slabs:

  • Rs. 7 lakh: Tax calculation for Rs. 7 lakh salary

  • Rs. 12 lakh: Tax calculation for Rs. 12 lakh salary

  • Rs. 15 lakh: Tax calculation for Rs. 15 lakh salary

It is essential to assess individual tax-saving options before choosing between the old vs. new tax regime. Make an informed decision based on your financial goals and tax-saving potential.

Other topics you might find interesting

Income Tax Notice Section 142 1​

Section 80CCD 2 of Income Tax Act

Section 194H of Income Tax Act

Section 80CCD 1 of Income Tax Act

Section 148 of Income Tax Act

Section 80GGC of Income Tax Act

Section 80DD of Income Tax Act

Section 80E of Income Tax Act

Home Loan Interest Deduction

Section 80CCD 1B of Income Tax Act

Section 80DDB of Income Tax Act

Section 80G of Income Tax Act

56 2 X of Income Tax Act

Section 194IA of Income Tax Act

Section 80EEA of Income Tax Act

Section 80GG Deduction of Income Tax Act

Conclusion

Understanding how income tax works allows you to make informed decisions about which regime to choose. If you wish to follow the old tax regime, you can lower your tax burden by investing in schemes like PPF, ELSS, NSC, or Sukanya Samriddhi Yojana. On the other hand, the new regime provides simpler slab rates, and you can still claim a few useful deductions like the standard deduction and employer’s NPS contribution. Planning to buy a house? You can also claim home loan benefits through Bajaj Finserv, which can support your financial planning while potentially reducing your taxable income. You might already be eligible – check your loan offers now by entering your mobile number and verifying with an OTP.

Know how to calculate income tax on different salary slabs

Salary amount

Calculate income tax for different salary slab:

Rs. 7 lakh

Income tax on Rs. 7 lakh

Rs. 15 lakh

Income tax on Rs. 15 lak

 

Popular calculators for your financial calculations

Home Loan EMI Calculator

Home Loan Tax Benefit Calculator

Income Tax Calculator

Home Loan Eligibility Calculator

Home Loan Prepayment Calculator

Stamp Duty Calculator

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

What is the income tax rate for individuals earning more than Rs. 12 lakh in a year in India?

For the financial year 2023-2024, individuals earning Rs. 12 lakh or more fall under the 30% tax bracket.

What are tax deductions, and how can they help in reducing my tax liability?

Tax deductions are exemptions or allowances that reduce your taxable income, subsequently lowering your tax liability. These deductions can be claimed for various expenses like investments, insurance premiums, and home loan interest.You might already be eligible for competitive interest rates from Bajaj Finserv – check your loan offers now by entering your mobile number and verifying with an OTP.

Can I claim deductions under Section 80C if my income is above Rs. 12 lakh?

Yes, individuals with an income above Rs. 12 lakh can still claim deductions under Section 80C for investments in specified instruments such as Provident Fund, National Savings Certificates, and Equity-Linked Savings Schemes (ELSS).

Are there any tax-saving investment options beyond Section 80C for high-income earners?

Yes, high-income earners can explore deductions under Sections like 80D for health insurance premiums, 24(b) for home loan interest, and 80CCD (2) for employer's contribution to NPS in the new tax regime.

Can I claim deductions for my children’s education expenses if my income exceeds Rs. 12 lakh?

While there are no specific deductions for children's education expenses, you can explore exemptions for tuition fees under Section 80C or education loans under Section 80E, irrespective of your income.

How can I calculate my income tax on a salary of Rs. 12 lakh?

To calculate your income tax on a salary of Rs. 12 lakh, use an income tax calculator. Input your salary details, including any deductions and exemptions, to get an accurate tax liability. The income tax calculator considers the latest tax slabs and rules for precise calculations.

Can I use an online income tax calculator to estimate my tax liability on a Rs. 12 lakh salary?

Yes, you can use an online income tax calculator to estimate your tax liability on a Rs. 12 lakh salary. These calculators consider current tax slabs, deductions, and exemptions to provide accurate tax estimates, helping you plan your finances effectively and understand your tax obligations.

Are there any specific tax benefits for senior citizens with a Rs. 12 lakh salary?

Yes, senior citizens, aged 60 years and above, get specific tax benefits. They have a higher basic exemption limit of Rs. 3 lakh. So on a Rs. 12 lakh salary, they would only have to pay tax on Rs. 9 lakh. Additionally, senior citizens also benefit from a higher interest income exemption limit under section 80TTB.

How much tax do I pay on Rs. 12 lakhs?

The tax on a Rs.12 lakh annual salary depends on the chosen tax regime:

  • New Tax Regime (FY 2024-25): Approx. Rs.78,000 (after deductions like standard deduction).

  • Old Tax Regime: Tax varies based on exemptions and deductions (e.g., Section 80C, 80D).

Use an income tax calculator to get an exact amount.

Is a Rs. 12 lakh salary zero tax?

No, a Rs.12 lakh salary is taxable. However, under the old tax regime, by claiming exemptions like 80C (Rs.1.5 lakh), 80D, and HRA, the taxable income can be reduced significantly.

How much tax will I pay on a Rs. 12,00,000 salary?

Under the new tax regime, the approximate tax liability is Rs.78,000 after the Rs.50,000 standard deduction. The exact amount may vary based on available deductions under the old regime.

How much TDS is deducted on a Rs. 12 lakh salary?

TDS is deducted as per the applicable income tax slab:

 

  • If the employer follows the new tax regime, TDS will be around Rs. 6,500 per month.
  • Under the old tax regime, deductions like 80C, 80D, and HRA can reduce TDS liability.

 

It's advisable to submit investment proofs to the employer for lower TDS deductions.

Show More Show Less