New Delhi, Feb. 20 -- In Union Budget 2025-26, finance minister Nirmala Sitharaman raised the tax-rebate threshold under Section 87A of the Income Tax Act from Rs.7 lakh to Rs.12 lakh. With the standard deduction of Rs.75,000, the threshold is Rs.12.75 lakh for salaried individuals.

Though the announcement was widely welcomed, it failed to address a critical question - does income from capital gains affect a person's eligibility for the rebate? In other words, if a person with a Rs.12 lakh salary earns an additional Rs.1 lakh from capital gains, will they lose the rebate or will they only have to pay tax on the capital gains?

This confusion isn't new. Even with the current Rs.7 lakh rebate threshold, tax experts are confused about wheth...