Salary up to INR 12.75 Lakh? You May Still Need to Pay Tax

A salaried person earning up to INR 12.75 lakh may have zero tax liability under the New Tax Regime, but certain types of income can still attract tax.

1. Zero Tax on Salary up to INR 12.75 Lakh (Subject to Conditions)

A salaried taxpayer can effectively have nil tax liability up to INR 12.75 lakh because of the standard deduction, Rebate under Section 87A and benefits available under the applicable tax regime. However, filing the Income Tax Return is necessary to claim the rebate. The benefit is available on eligible salary income.

2. ITR Due Date: 

For AY 2026-27 (FY 2025-26): ITR Due Date: 31 July 2026. Applicable to taxpayers who are not liable for tax audits.

3. Some Incomes Remain Taxable Even If Salary Is Below INR 12.75 Lakh

Capital Gains: Section 87A rebate generally does not apply to certain capital gains taxed at special rates. Examples: 

Listed Equity Shares / Equity Mutual Funds

• Long-Term Capital Gains exceeding INR 1.25 lakh—Taxable at 12.5%
• Short-term capital gains – Taxable at 20%

Unlisted Shares

• Long-Term Capital Gains – 12.5%
• Short-term capital gains – Taxable at slab rates

Immovable Property

• Long-Term Capital Gains generally taxable at 12.5%
• Short-term capital gains taxable at slab rates

Virtual Digital Assets (Crypto Assets)

Income from cryptocurrency, digital tokens, and similar virtual digital assets (VDAs) is generally taxed at 30% + applicable cess and surcharge. Important points

• Only acquisition cost is allowed as a deduction.
• Basic exemption and rebate benefits are generally restricted for such income.

Lottery and Speculative Income 

Income from lottery winnings, horse racing, and similar speculative activities is taxed at a flat 30% (plus applicable cess and surcharge). No normal rebate benefit is available against such special-rate income.

4. ITR May Still Be Mandatory

Even if tax liability is nil, return filing may be compulsory if you have:

• Electricity expenditure of INR 1 lakh or more during the year
• Foreign travel expenditure exceeding INR 2 lakh
• Certain high-value credit card or financial transactions
• Other specified reporting requirements under the Income Tax Act

If tax liability is nil after the Sect  87A rebate, should taxpayer still file a return 

Summary 

Salary below INR 12.75 lakh does not automatically mean zero tax. While salary income may qualify for rebate and result in nil tax liability, incomes such as capital gains, crypto income, lottery winnings, and other special-rate incomes can still be taxable. Therefore, taxpayers should review all sources of income carefully and file their income tax return to claim eligible benefits and remain compliant.