Is ₹7 Lakh Income Tax-Free in India?
Is ₹7 Lakh Income Tax-Free in India?
Updated Guide for FY 2024–25 | AY 2025–26
If you're earning up to ₹7 lakh annually and wondering whether you need to pay any income tax, you're not alone. The government’s revised tax system has brought huge relief for middle-income earners, especially under the New Tax Regime.
In this article, we’ll break down how income up to ₹7 lakh is tax-free in India, the conditions you need to meet, and whether it applies under both tax regimes.
✅ Is ₹7 Lakh Income Tax-Free in 2025?
Yes, income up to ₹7 lakh is effectively tax-free in FY 2024–25 (AY 2025–26)—but only under the New Tax Regime, thanks to the Section 87A rebate.
Let’s understand how this works.
📘 Section 87A Rebate – The Game Changer
Under the New Tax Regime, if your total income is ₹7 lakh or less, you get a rebate of ₹25,000 under Section 87A.
| Particulars | Amount (₹) |
| Total Income | ₹7,00,000 |
| Tax Payable (as per slab) | ₹25,000 |
| Less: Rebate u/s 87A | ₹25,000 |
| Net Tax Payable | ₹0 |
So, if your taxable income is ₹7 lakh or less, your net tax liability is zero, even though technically you fall into the 5%, 10%, or 15% tax brackets.
🧾 What If You Earn ₹7.1 Lakh or More?
Even ₹1 extra income beyond ₹7 lakh (without deductions) removes the rebate, and you’ll need to pay full tax as per the slab.
But here's the trick:
You can still bring your taxable income down to ₹7 lakh by claiming:
- Standard deduction of ₹50,000 (available under the new regime)
- NPS contributions under 80CCD(2) (if allowed by employer)
- Professional tax (in applicable states)
By using these, you can retain your eligibility for the rebate.
📊 Tax Slabs Under New Regime (FY 2024–25)
| Income Slab | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
This structure applies to salaried, freelancers, and pensioners under the new regime.
❌ Does the ₹7 Lakh Tax-Free Limit Apply in the Old Regime?
No, the ₹7 lakh rebate does not apply in the old tax regime.
In the old regime, the basic exemption limit was:
- ₹2.5 lakh (for <60 years)
- ₹3 lakh (for 60–79 years)
- ₹5 lakh (for 80+ years)
However, under the old regime, you can reduce your taxable income to ₹5 lakh using:
- Section 80C (up to ₹1.5 lakh)
- 80D, HRA, LTA, and other deductions
If your taxable income is up to ₹5 lakh, you can still claim the Section 87A rebate of ₹12,500 and pay zero tax.
🧠 Who Should Choose the New Regime?
Choose the New Regime if:
- You don’t claim many deductions
- You are salaried with limited investments
- Your income is around ₹7–7.5 lakh
- You want a simple, hassle-free filing
Final Words
Yes, ₹7 lakh income is 100% tax-free in India under the New Tax Regime, thanks to the Section 87A rebate.
If your income slightly exceeds the limit, make use of the standard deduction and salary structuring tips to bring it down and save tax legally.
💡 Tip: Monitor your salary slips and Form 16 throughout the year to ensure your taxable income stays under ₹7 lakh if you're opting for the new regime.
