How does the new income tax policy work for individuals earning up to 12 lakh rupees per year?

Under the 2025 Union Budget, Finance Minister Nirmala Sitharaman announced that individuals earning up to 12 lakh rupees per annum will effectively pay zero income tax. While taxpayers technically calculate taxes using the new slabs (0% up to 4 lakhs, 5% from 4-8 lakhs, and 10% from 8-12 lakhs), the government introduced enhanced tax rebates that completely offset these taxes. For example, someone earning 12 lakhs would initially calculate 60,000 rupees in tax liability, but would receive an equivalent rebate when filing tax returns, resulting in zero net tax payment.