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Cases of special income where ₹12 Lakh exemption not apply


 💸💼 Capital Gains, Rebates & Special Incomes: What Budget 2025 Means for You

❓Q1. Why does the ₹12L rebate not apply to capital gains or lotteries?

Because Section 87A applies only to normal slab income (like salary/business/profession).

💡Case Study:

  • Mr. A earns ₹12L salary → Zero tax after 87A rebate
  • Mr. B earns ₹12L LTCG → ₹1.25L exempt → ₹10.75L taxable
    → Tax = ₹1,34,375 (at 12.5%)

Mr. C wins ₹12L lottery → Tax = ₹3.6L (flat 30%)

 

❓Q2. Can you use your basic exemption limit for STCG?

✅Yes, but with limits:
If your total income excluding STCG is below ₹2.5L (or ₹3L/₹5L depending on age), the unutilized part of the exemption gets adjusted against STCG.

⛔ No rebate under Section 87A is available for STCG—even if your total income is ₹12L or less.

💡Example:
A 30-year-old with ₹2L salary and ₹1L STCG:

  • ₹50,000 unused exemption → STCG taxable = ₹50,000
  • Tax = ₹10,000 (20%)

❓Q3. What are the updated LTCG tax rates?

🗓️ Before July 23, 2024:
LTCG on listed equity & equity MFs > ₹1L → Tax @ 10%

🗓️ On or after July 23, 2024:
LTCG > ₹1.25L → Tax @ 12.5%

💡Example:
Gain = ₹2,00,000 (post-July 2024)
Exempt: ₹1.25L → Taxable: ₹75,000
Tax = ₹9,375 (12.5%)

❓Q4. Are there rebates or exemptions on LTCG?

✅ Yes: First ₹1,25,000 of LTCG is exempt (if post-July 2024).
✅ LTCG can be adjusted against the basic exemption limit.

⛔ No 87A rebate applies on LTCG.

💡Tip: Retired senior citizens with no salary can save tax on LTCG by using basic exemption.

❓Q5. How are lottery winnings, gambling & games taxed?

🎰 Winnings from lottery, gambling, horse racing etc.
→ Flat 30% tax (Section 115BB)
→ ⛔ No exemptions, ⛔ No deductions, ⛔ No 87A rebate.

🎮 For online gaming → Tax under Section 115BBJ (separate flat rate)

💡Example:
Won ₹1L in a lucky draw → Tax = ₹30,000 (regardless of total income)

❓Q6. What are the new tax slabs under Section 115BAC (New Regime)?

Income Slab

Tax Rate

Up to ₹4L

0%

₹4L – ₹8L

5%

₹8L – ₹12L

10%

₹12L – ₹16L

15%

₹16L – ₹20L

20%

₹20L – ₹24L

25%

Above ₹24L

30%

🟢 Higher exemption limit = More tax-free income!
(Earlier: ₹3L ➡ Now: ₹4L)

❓Q7. What is the maximum rebate under 87A in the New Regime?

💰 Up to ₹60,000 rebate under Section 87A
🟢 Applicable if Total Income ≤ ₹12 Lakhs

BUT...

⚠️ Not applicable on special incomes:

  • STCG
  • LTCG
  • Lottery/gambling winnings
    (These are taxed separately at special rates)

🚫❓Q8. What are the new STCG tax rates for listed equity shares and mutual funds?

🗓️ Before July 23, 2024:
✅ Short-Term Capital Gains (STCG) where STT is paid → Taxed at 15%

🗓️ On or after July 23, 2024:
🔺 STCG rate increased to 20%

💡Example:
If you sold equity shares in August 2024 for a gain of ₹1,00,000:
👉 Tax = ₹20,000 (earlier it would’ve been ₹15,000)

✅ Key Takeaways

🔹 STCG jumps to 20% from July 23, 2024
🔹 LTCG now taxed at 12.5% after ₹1.25L
🔹 No 87A rebate on special income
🔹 Use basic exemption smartly to reduce capital gains tax
🔹 Flat 30% tax on lotteries—no deductions or mercy!

📢 Pro Tip by CA Bhavesh Panpaliya:
“Plan your investment :always separate slab income from capital gains while calculating rebate eligibility.”

 



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