New Delhi, Feb. 3 -- In the Union Budget 2025, Finance Minister Nirmala Sitharaman mentioned that the 'nil income tax' slab would be raised to Rs.12 lakh; however, it is often misunderstood as a tax exemption or tax deduction. Here's what it really means.

"To taxpayers up to Rs12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them," FM Nirmala Sitharaman said during the budget speech.

Hence, a tax rebate will be provided to those earning up to Rs.12 lakh under the new tax regime.

According to Section 87A of the Income Tax Act, a tax rebate is tax relief provided to individuals...