Tax season is one of the most stressful times of the year for working citizens. Tax liabilities can quickly eat into your income and leave you with far less money for investments than you would like.
However, if you are in the 12 lakh tax slab, the new tax regime is cause for celebration, with some much-needed tax relief.
This article will explore the updated income tax on 12 lakhs income under the new regime and help you decide which tax regime, old or new, is best for you.
Income tax slab for a 12 lakh salary in Budget 2026
No income tax on a 12 lakh salary or less due to increased rebate up to Rs. 60,000.
Tax slab rates for the fiscal year 2026-27 under the new tax regime:
रुपए में कुल इनकम
कर की दर
4 लाख तक
0%
4 से 8 लाख
5%
8 से 12 लाख
10%
12 से 16 लाख
15%
16 से 20 लाख
20%
20 से 24 लाख
25%
24 लाख से अधिक
30%
Old vs new regime: Income tax on a 12 lakh salary
The tax revisions introduced in the new tax regime significantly decrease tax burdens for individuals with income up to Rs. 12 lakh, allowing them to enjoy zero income tax due to the increased rebate.
Rates for income tax on Rs. 12 lakh to 24 lakh have also been lowered.
The following table illustrates the differences in income tax slabs between the old and new tax regimes:
रुपए में कुल इनकम
पुरानी व्यवस्था में टैक्स दर
नई व्यवस्था में टैक्स दर (2026)
₹2.5 लाख तक
0%
0%
₹ 2.5 लाख - ₹ 4 लाख
5%
0%
₹ 4 लाख - ₹ 8 लाख
5%
5%
₹ 8 लाख - ₹ 12 लाख
20%
10%
₹ 12 लाख - ₹ 16 लाख
30%
15%
₹ 16 लाख - ₹ 20 लाख
30%
20%
₹ 20 लाख - ₹ 24 लाख
30%
25%
Over Rs. 24 lakh
30%
30%
While the new tax regime has introduced financial relief for citizens, taxpayers still have the option to choose the old tax regime if they prefer the benefits particular to that regime instead.
Tax deductions & exemptions: Old vs new regime
The new tax regime offers limited deductions in comparison to the old regime:
Tax exemptions, such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA), are no longer available.
Deductions under Section 80C, such as life insurance and PF contributions, have been removed.
Exemptions for transport and medical allowances are also unavailable.
However, there are still valuable savings opportunities provided by the new regime, including:
Rs. 75,000 flat deductions for salaried and pensioned individuals.
Deductions under Section 80CCD (2) include the employer’s contribution to the National Pension Scheme.
Income tax calculation on 12 lakh salary: Detailed example (Old & new regime)
निम्नलिखित उदाहरण से आपको यह समझने में मदद मिलेगी कि पुरानी और नई दोनों व्यवस्थाओं के तहत 12 LPA सैलरी के लिए टैक्स की गणना कैसे करें.
● नई टैक्स व्यवस्था
सकल सैलरी: ₹ 12,00,000
मानक कटौती: ₹ 75,000
टैक्स योग्य इनकम: ₹ 11,25,000
कुल देय टैक्स की गणना करने के लिए लागू इनकम टैक्स स्लैब दरें इस प्रकार हैं:
स्लैब
टैक्स दर
टैक्स राशि (₹)
0 – 4,00,000
शून्य
0
4,00,001 – 8,00,000
5%
20,000
8,00,001 – 11,25,000
10%
32,500
छूट से पहले कुल टैक्स
52,500
सेक्शन 87A छूट
(52,500)
कुल देय टैक्स
0
The new tax regime allows a rebate of Rs. 60,000 under Section 87A. As a result, the total tax on 12 lakh income is zero.
● Old tax regime
सकल सैलरी: ₹ 12,00,000
मानक कटौती: ₹ 50,000
Section 80C (PPF/ELSS/EPF): Rs. 1,50,000
Section 80D (Health insurance): Rs. 50,000
Section 80CCD (1B) NPS: Rs. 50,000
Home loan interest (Section 24): Rs. 95,000
कुल कटौती: ₹ 3,95,000
टैक्स योग्य इनकम: ₹ 8,05,000
स्लैब
टैक्स दर
टैक्स राशि (₹)
0 – 2,50,000
शून्य
0
2,50,001 – 5,00,000
5%
12,500
5,00,001 – 8,05,000
20%
61,000
कुल टैक्स
73,500
4% cess
2,940
कुल देय टैक्स
76,440
The tax on a 12 lakh salary will always be higher under the old regime, even if you have high deductions.
How to save tax for a salary above 12 lakhs: Investment & exemption strategies
If your salary is above Rs. 12 lakh, you can legally reduce your tax burden with proper tax planning. The right strategy depends on whether you choose the old or the new tax regime. Several deductions and exemptions are permitted under the old regime, while lower tax rates with limited deductions apply to the new regime. You must compare both regimes carefully before deciding.
Here’s how to save tax for a 12 lakh income under both regimes through investment and exemption strategies:
Under the new tax regime:
Standard deduction: Rs. 75,000 (for salaried individuals)
Employer’s NPS contribution (Section 80CCD(2)): Up to 10% of salary (14% for government employees)
Family pension deduction: Lower of Rs. 15,000 or 1/3 of pension
Gratuity and leave encashment: Exempt up to prescribed government limits
Please note: 80C, 80D, HRA, LTA, and home loan interest on self-occupied property are not allowed in this regime.
Under the old tax regime:
मानक कटौती: ₹ 50,000
Section 80C: Up to Rs. 1,50,000 (PPF, EPF, ELSS, life insurance, principal repayment of home loan)
Home Loan Interest (Section 24): Up to Rs. 2,00,000
HRA & LTA: As per the salary structure and actual expenses
Education loan interest (Section 80E): Full interest amount (no limit)
You must choose the regime that gives you a lower overall tax.
Step-by-step: Which regime gives less tax for a 12 lakh income?
Every taxpayer wants to choose the regime that helps in saving taxes. Generally, you must compare the tax calculation under the new and old regimes before deciding. However, if your annual income is Rs. 12 lakh, the new regime is the right choice. It reduces your tax liability to zero. The new regime has lower tax rates and a higher Section 87A rebate. In comparison, the old regime allows you to claim various deductions from your total income. However, it still does not let you make your tax burden zero on a 12 lakh income.
Which tax regime is better for a 12 lakh salary?
Which tax regime you should opt for will depend on the tax deductions available to you. If you are eligible for several tax deductions and exemptions, then the old tax regime will be optimal for you.
However, if you cannot claim significant deductions, the lower tax rates provided by the new tax regime will be more beneficial for you.
For an annual income of Rs. 12 lakh, consider the following factors:
Salary income of Rs. 12 lakh: Choose the old regime if your tax-saving investments are over Rs. 30,000. Otherwise, go for the new regime.
Non-salary income of Rs. 12 lakh: Opt for the new regime if your tax-saving investments are less than Rs. 3,12,500. Otherwise, the old regime may be more beneficial for you.
रैपिंग अप
The new tax regime of 2026 offers much-needed tax relief for the common citizen. However, you may still find value in the old regime. Careful tax planning can help you maximize tax exemptions and boost your savings. Check out the Tata Capital blog to learn how to avail exemptions for tax on 12 lakh income.
Save money on your taxable income and achieve your homeownership goals with Tata Capital’s flexible home loan at attractive interest rates.
To learn more, check the Tata Capital website or download the app.
12 लाख की इनकम के लिए कौन सी टैक्स व्यवस्था बेहतर है?
आपकी इनकम का स्तर आपको यह चुनने में मदद करेगा कि कौन सी व्यवस्था आपके लिए सबसे अच्छी है. अगर आपकी सैलरी इनकम ₹ 12 लाख है और आपके पास तीन लाख रुपये से अधिक टैक्स-सेविंग निवेश है, तो पुरानी टैक्स व्यवस्था चुनें. अगर बचत तीन लाख से कम है, तो नई व्यवस्था चुनें. वैकल्पिक रूप से, अगर आपकी नॉन-सैलरी इनकम ₹12 लाख है, और टैक्स-सेविंग निवेश ₹3,12,500 से अधिक है, तो आप पुरानी व्यवस्था चुन सकते हैं.
What is the income tax rate for individuals earning more than Rs. 12 lakhs in a year in India?
For the financial year 2025-26, individuals earning more than Rs. 12 lakhs per year in India will have an income tax rate of 15% to 30%, depending on the individual’s salary.
What are tax deductions, and how can they help in reducing my tax liability?
Tax deductions include various tax allowances and exemptions. They help you save money by lowering your taxable income and tax liability. Tax deductions can be claimed under various expenses and investments, such as home loan interest and insurance premiums.
Can I claim deductions under Section 80C if my income is above Rs. 12 lakhs?
You can still claim deductions under Section 80C if your income is over Rs. 12 lakhs. These tax deductions can be claimed for investing in instruments such as National Savings Certificates, Equity-Linked Saving Schemes, and Provident Fund.
Are there any specific tax benefits for senior citizens with a Rs. 12 lakh salary?
Individuals aged 60 years or older have a higher basic exemption limit of three lakh rupees. Thus, senior citizens with a Rs. 12 lakh salary only have to pay tax on nine lakh rupees. Section 80TTB also lets senior citizens enjoy a higher interest income exemption limit.
Are there any tax-saving investment options beyond Section 80C for high-income earners?
High-income earners can benefit from tax deductions under Sections like 24(b) for home loan interest, 80D for health insurance premiums, and 80CCD (2) for employer’s contribution to NPS under the new tax regime.
What is the tax for a 12 lakh per annum salary in India (FY 2025-26)?
Under the new regime, the taxable income on a 12 lakh salary in India is zero. This is due to the standard deduction of Rs. 75,000 and the Section 87A rebate of Rs. 60,000. Under the old regime, tax on a 12 lakh salary depends on deductions claimed. These include 80C investments and home loan interest.
How do I save tax for a 12 lakh income under the old regime?
To save income tax for 12 lakhs per annum salary, you can use deductions of up to Rs. 1.5 lakh under Section 80C and an additional Rs. 50,000 through NPS. You can also use 80D health insurance, HRA, and home loan interest up to Rs. 2 lakh. Higher deductions reduce taxable income and lower your overall tax liability significantly.
Which deductions apply to a 12 lakh income tax under the new tax regime?
The new regime allows Rs. 75,000 standard deduction, employer’s NPS contribution under 80CCD(2), and limited exemptions like gratuity and leave encashment. Popular deductions like 80C, 80D, home loan interest, and HRA are not allowed.
क्या भारत में 12 लाख की सैलरी पर ज़ीरो टैक्स का भुगतान करना संभव है?
हां. Under the new regime, if taxable income after Rs. 75,000 standard deduction is within Rs. 12 lakh, lower tax rates and Section 87A rebate can make your total tax payable zero. This is inclusive of cess.
12 लाख की सैलरी के लिए कौन सी टैक्स व्यवस्था बेहतर है: पुरानी या नई?
The new regime is better if you have fewer deductions and want simpler filing for a 12 lakh salary. The old regime may be better if you invest heavily and claim multiple deductions that significantly reduce taxable income.
10 मार्च 2026
पढ़ने में लगने वाला समय - 6 मिनट
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