How much income is tax free in India depends on your regime: in the new regime, resident individuals pay no tax on taxable income up to ₹12 lakh, which for a salaried person means pay up to ₹12.75 lakh, or about ₹1,06,250 a month. In the old regime the zero tax point is ₹5 lakh of taxable income.
Two different limits are at work. The basic exemption limit (₹4 lakh new regime, ₹2.5 lakh old regime) is the income on which no tax is calculated at all. The rebate then wipes out tax on income above it, up to ₹12 lakh or ₹5 lakh. These figures hold for FY 2025-26 (AY 2026-27) and for tax year 2026-27.
Quick facts
New regime, any resident
₹12,00,000 taxableNew regime, salaried
₹12,75,000 gross salaryOld regime
₹5,00,000 taxableBasic exemption, new
₹4,00,000Basic exemption, old
₹2,50,000; ₹3 lakh at 60; ₹5 lakh at 80Not covered
Special rate gains such as 111A and 112A
Income tax exemption limit for FY 2025-26 by regime
| Taxpayer | Basic exemption limit | No tax up to (after rebate) |
|---|---|---|
| Resident individual, new regime | ₹4,00,000 | ₹12,00,000 taxable |
| Salaried resident, new regime | ₹4,00,000 | ₹12,75,000 salary |
| Resident under 60, old regime | ₹2,50,000 | ₹5,00,000 taxable |
| Resident 60 to 79, old regime | ₹3,00,000 | ₹5,00,000 taxable |
| Resident 80 or more, old regime | ₹5,00,000 | ₹5,00,000 taxable |
| Non-resident individual | ₹4,00,000 new, ₹2,50,000 old | No rebate |
| HUF | ₹4,00,000 new, ₹2,50,000 old | No rebate |
In the old regime the salaried figure depends on your deductions. With the ₹50,000 standard deduction and full 80C of ₹1,50,000, salary of ₹7,00,000 brings taxable income to ₹5,00,000, so no tax.
How much income is tax free in India per month
| Income type | Tax free per month |
|---|---|
| Salary or pension | ₹1,06,250 (₹12,75,000 a year) |
| Rent, interest or freelance income | ₹1,00,000 (₹12,00,000 a year after deductions) |
These are averages. Bonuses, arrears and interest all count toward the yearly total, so a person with ₹1,00,000 a month of salary and ₹1,00,000 of FD interest in the year has ₹13,00,000 of gross income and ₹12,25,000 taxable after the standard deduction. That is above ₹12 lakh, so tax is due, softened by marginal relief to ₹25,000 plus cess.
Worked example: a freelancer under 44ADA
Karan, a resident designer, receives ₹20,00,000 in FY 2025-26, almost all by bank transfer. He uses presumptive taxation under section 44ADA.
- Deemed profit: 50% of ₹20,00,000 = ₹10,00,000.
- New regime slab tax: ₹20,000 plus 10% of ₹2,00,000 (₹20,000) = ₹40,000.
- Rebate: ₹40,000, as income is below ₹12 lakh.
- Tax payable: nil. He must still file a return, because income is above ₹4 lakh.
Read 44ADA for professionals for the conditions.
Tax free income in India that is not counted at all
- Agricultural income: exempt, though it can raise the rate on other income in some cases; see agricultural income.
- PPF interest and maturity: exempt.
- Gifts from relatives: exempt at any amount; from others, exempt if the year's total is ₹50,000 or less. See tax on gifts.
- Long term gains on listed equity: the first ₹1,25,000 a year under 112A is not taxed.
Exempt income still goes in the exempt income schedule of the return where the form asks for it.
ITR exemption limit: when you must file even with zero tax
Zero tax does not mean no return. You must file for FY 2025-26 if your gross total income, counted before deductions, tops the basic exemption limit of your regime, even if the rebate brings tax to nil. Filing is also needed in some cases below that limit, such as large bank deposits or foreign assets. Filing a return is also the only route to get back TDS that was deducted. File on the e-filing portal; the section 139(1) guide lists all the triggers.
TDS exemption limit on common payments
| Payment | Yearly limit |
|---|---|
| Bank deposit interest (194A) | ₹50,000; ₹1,00,000 for senior citizens |
| Contract payments (194C) | ₹30,000 per bill or ₹1,00,000 in a year |
| Professional fees (194J) | ₹50,000 |
| Rent by individuals (194IB) | Rent above ₹50,000 a month |
Tax not deducted is not tax waived. Income below a TDS threshold is still added to your total income. The full list is in the TDS rate chart.
Misreadings of the tax free limit
| Misreading | Correct position |
|---|---|
| ₹12 lakh of any income is tax free | Special rate gains are taxed even below ₹12 lakh |
| No tax, so no return | File when gross income crosses your basic exemption figure |
| An NRI gets the same ₹12 lakh limit | Non-residents get no rebate |
| Income tax limit for FY 2026-27 has risen | Rates and limits for tax year 2026-27 match FY 2025-26 |
These limits are general information, not a promise about your tax. Your result depends on your income mix and residence; so your own chartered accountant, or the department itself, should confirm it.
Sources we checked
- Income-tax Act, 1961, section 87A
- Income-tax Act, 1961, section 139(1)
- Income-tax Act, 1961, section 10
- Income-tax Act, 2025, section 156
Frequently asked questions
What is the income tax limit for FY 2025-26?
In the new regime, tax is nil on taxable income up to ₹12 lakh for a resident individual, or ₹12.75 lakh of salary. The basic exemption limit stands at ₹4 lakh. Under the old regime, tax is nil up to ₹5 lakh of taxable income.
What is the income tax limit for FY 2026-27?
Tax year 2026-27 uses the same figures: ₹4 lakh basic exemption and, through the rebate, nil tax for new regime incomes not above ₹12 lakh, now in section 156 of the 2025 Act.
What is the income tax basic exemption limit?
It is the income on which the slab rate is nil: ₹4 lakh in the new regime, and ₹2.5 lakh, ₹3 lakh or ₹5 lakh by age in the old regime.
Is ₹12 lakh income tax free for everyone?
No. It is limited to resident individuals, and gains taxed at special rates, like listed share profits, fall outside it. HUFs and NRIs pay tax above ₹4 lakh in the new regime.