Income-tax rebate calculation: Capital gains under sections 111 A, 112 excluded, says CBDT

Capital gains taxable under sections 111A and 112 will not be considered for enhanced income-tax rebate under section 87A proposed in the Finance Bill 2025, according to the Central Board of Direct Taxes (CBDT).

The Finance Bill 2025 has proposed to increase the income threshold for claiming a tax rebate under Section 87A for resident individuals taxable under the new regime from ₹7 lakh to ₹12 lakh.

The maximum rebate under section 87A has been proposed to be increased from ₹25,000 to ₹60,000 under the new tax regime.

It has also proposed to revise the slab rates and increase the basic exemption limit to ₹4 lakh under the new regime.

As a result of the revised tax rebate and slab rates, income up to ₹12 lakh will become tax-free under the new tax regime after the Finance Bill 2025 comes into force.

Let's look at how this will be calculated:

Tax up to ₹4 lakh: 0

Tax on income between ₹4 lakh to ₹12 lakh = ₹60,000

Rebate under section 87A = ₹60,000

Total tax on income up to ₹12 lakh = 0

However, income from assets that are subject to special rates as specified in the Income-tax Act 1961 will not be considered in the calculation of the tax rebate under section 87A, as per the CBDT's statement.

Personal tax rates in Finance Bill 2025

• No changes have been proposed in the tax rates for assessees opting for the old tax regime.
• No changes have been proposed in rates of surcharge and education cess.
• The tax rates and slabs under the new tax regime of Section 115BAC have been proposed to be revised. The new tax structure under the new regime will be as follows:

The Finance Bill 2025 will come into effect from April 1, 2025. However, the provisions of the bill may undergo some changes before it becomes an Act.