ITR filing: Does a taxpayer with income below Rs 12 lakh have to file IT returns after Budget 2025?

Income tax return: The Union Budget 2025 has provided much-needed relief to middle-class taxpayers. In her announcement on Saturday, Finance Minister Nirmala Sitharaman stated that individuals earning up to Rs 12 lakh annually will no longer be required to pay income tax if they choose the new tax regime. This revision has increased the tax-free threshold by Rs 5 lakh, up from the previous Rs 7 lakh.

The Finance Ministry has clarified that this zero tax liability applies only to the new tax regime, which has been the default since 2023. To benefit from this change, individuals only need to file their Income Tax Return (ITR) — no additional steps are necessary.

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Previously, someone earning Rs 12 lakh per year would typically pay around Rs 80,000 in income tax under the new regime. With the revised thresholds, this tax obligation has been eliminated, as long as the taxpayer submits an ITR to claim the rebate.

"A tax return needs to be filed even if the income is below Rs 12 lakh. Taxpayers are exempt from filing returns only if the basic exemption limit is not breached. This limit is Rs 2.5 lakh for ordinary citizens (below 60 years of age), Rs 3 lakh for senior citizens (ages 60 to 79), Rs 5 lakh for super senior citizens (80 years or older) under the Old Tax Regime, and Rs 4 lakh for all individuals under the new tax regime," said CA (Dr.) Suresh Surana.

There are also other criteria, which, if met, require a return to be filed even if the total income does not exceed the basic exemption limit, such as:

1.     Current account deposits with banking institutions exceeding Rs 1 crore
2.     Electricity bill of more than Rs 1 lakh
3.     Expenditure on foreign travels exceeding Rs 2 lakh

Tax-related FAQs

1. How will a person who has an income Rs 12 lac benefit from new rates?
Ans. Any individual earlier was required to pay a tax of Rs 80,000 (in the new regime) for an income of Rs. 12 lacs. Now he will be required to pay nil tax on such income.

2. Whether the limit of total income for NIL tax payments has increased in this budget?
Ans. Yes, the limit of total income for NIL tax payments in the new tax regime has been increased to Rs. 12 lakhs in this budget provided the taxpayer files ITR to avail the rebate.

3. Whether the limit of total income for NIL tax payments has increased in this budget?
Ans. Yes, the limit of total income for NIL tax payments in the new tax regime has been increased to Rs. 12 lakhs in this budget provided the taxpayer files ITR to avail the rebate.

4. . What was the earlier limit of income for nil tax payment?
Ans. Earlier the limit of income for nil tax payment was Rs 7 lakh. By increasing this limit to Rs 12 lakh around one crore assessees who were earlier required to pay tax varying from Rs 20,000 to Rs 80,000 will be now paying nil tax.

5. Revised Income Tax Slabs
The new tax regime will have an additional 25% tax slab, taking the total number of slabs to seven in FY26. The new tax slab structure is as follows:

Rs 0 – Rs 4,00,000: 0%
Rs 4,00,001 – Rs 8,00,000: 5%
Rs 8,00,001 – Rs 12,00,000: 10%
Rs 12,00,001 – Rs 16,00,000: 15%
Rs 16,00,001 – Rs 20,00,000: 20%
Rs 20,00,001 – Rs 24,00,000: 25%
Rs 24,00,001 and above: 30%