Many people are confused about why the tax slabs mention 5% and 10% tax for incomes up to 12 lakh when the government says "No tax up to 12 lakh." The reason is rebate. A rebate means that even though tax is calculated as per slabs, the government waives off the total tax amount for incomes up to 12 lakh to reduce the tax burden on middle class people. So, even if your tax is calculated as per slab, it will eventually become zero after applying the rebate. ✓ If your income is 12 lakh or less → No tax. X If your income is above 12 lakh → Normal tax slabs apply without rebate. This is why the slabs exist, but no tax is paid up to 12 lakh! Hope this clears the confusion.