A Common Misconception

Recent changes in India’s income tax structure, particularly the introduction of rebates, have led to some confusion among taxpayers regarding their obligations to file Income Tax Returns (ITRs). Under the new tax regime introduced in the Finance Budget 2025, individuals with taxable incomes up to ₹12 lakh are eligible for a rebate under Section 87A, effectively reducing their tax liability to zero. However, this rebate does not imply that the income tax exemption limit has been raised to ₹12 lakh. The basic exemption limits, which determine the necessity to file an ITR, remain unchanged.