Will you pay Rs 61,500 as income tax on Rs 12.10 lakh income? Know how marginal relief comes into play
However, there can be individuals whose net taxable income exceeds Rs 12 lakh just by a small margin after claiming the maximum eligible deductions. How much does he/she have to pay? While income tax at Rs 12 lakh would be zero, however, on Rs 12.10 lakh income it could go up significantly to Rs 61,500 if no relief is available. Will he have to pay the entire tax or pay a lower tax by claiming marginal tax relief?
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Also Read: New income tax slabs announced in Budget 2025
What is marginal relief and how does it help taxpayers to pay lower taxes on incomes just above Rs 12 lakh
Suresh Surana, a Practising Chartered Accountant, says, «An individual can claim marginal tax relief if their taxable income is more than Rs 12 lakh. The marginal relief can be claimed even after a taxpayer claims all the relevant deductions available under the new tax regime.»
Marginal relief is available under section 87A for the new tax regime in the Income Tax Act. It is designed to provide relief to the taxpayers when income exceeds marginally the specified threshold, however, the corresponding tax is more than the marginal increase in income. Marginal relief is available in such a manner that the net amount payable as income tax shall not exceed the total amount as income tax on a total income of Rs 12 lakh by more than the amount of income exceeding Rs 12 lakh.
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