Earn Under ₹12.75L? 3 Incomes That Still Tax You

Even if your employer deducted zero TDS this year, income from FD interest, rent, or freelance work can push your total tax above zero. Here's what to check before filing your ITR.

Here's what happened: Budget 2025 raised the tax-free income limit to ₹12 lakh (₹12.75 lakh for salaried with standard deduction), so many employees saw no TDS deducted.. But the zero-tax benefit applies only to your net taxable income after all deductions — extra income from FDs, rent, or side work is added on top.. If total income including these sources crosses ₹12.75 lakh, you owe tax on the entire amount above the basic exemption slab, not just the excess..

What you should do: Download your Form 26AS and AIS from the Income Tax portal — check if bank interest, dividend, or rent income has been reported that your employer didn't account for.. Add up ALL income sources: salary, FD interest, rental income, freelance payments, and capital gains — then calculate your actual taxable income before assuming zero liability.. If your total income exceeds ₹12.75 lakh after adding non-salary income, pay any outstanding advance tax or self-assessment tax before filing your ITR to avoid interest under Sections 234B and 234C..

Banks deduct only 10% TDS on FD interest above ₹40,000/year — but if you're in the 20% or 30% slab, you still owe the difference when filing your ITR.