Capital Gains Impact on Tax Rebate: What You Need to Know

The Union Budget 2025-26 has introduced significant changes to the income tax rebate under Section 87A. While the rebate limit has been increased to ₹12 lakh under the new tax regime, it comes with a crucial caveat. Income from capital gains and other sources taxed at special rates will no longer be eligible for this rebate. This means that even if your total income falls below ₹12 lakh, you may still have to pay taxes on capital gains. The change aims to clarify the tax treatment of special income categories and will take effect from April 1, 2025. Taxpayers should carefully consider their income sources when planning their taxes for the upcoming financial year.
Sources: The Times of India, Economic Times, tax2win.in