*Full tax on income above Rs 12 lakh but marginal relief helps you save big, know how much you will save after Budget 2026 – The Economic Times

https://economictimes.indiatimes.com/wealth/tax/full-tax-on-income-above-rs-12-lakh-but-marginal-relief-helps-you-save-big-know-how-much-you-will-save-after-budget-2026/articleshow/127840439.cms

Clipped from: https://economictimes.indiatimes.com/wealth/tax/full-tax-on-income-above-rs-12-lakh-but-marginal-relief-helps-you-save-big-know-how-much-you-will-save-after-budget-2026/articleshow/127840439.cms

Marginal relief is a beneficial provision which allows taxpayers with income above Rs 12 lakh to pay lower taxes than otherwise would have been. In the new regime, marginal relief is available to only resident individuals who have income marginally above Rs 12 lakh.

For example, for a person having income of Rs 12, 10,000, in the absence of marginal relief, the tax, works out to be Rs 61,500 (5% of Rs 4 lakh+ 10% of Rs 4 lakh + 15% of Rs 10,000). However, due to marginal relief, the amount of tax to be actually paid is Rs 10,000.

The tax liability on such tax payer by way of slabs only is Rs 61,500. However a person having Rs 12 lakh income pays nil tax. By providing marginal relief it has been ensured that the tax payable by a person having income marginally above Rs 12 lakh is required to pay only marginal amount of tax equal to the amount of income above Rs 12 lakh so that his carry home is also Rs 12 lakh. In this case he will be required to pay a tax of Rs 10,000.

Salary Income	Tax under old tax regime (in Rs)	Tax under new tax regime (in Rs)	Net benefit under the new tax regime (in Rs)
Rs 15,00,000	2,57,400	97,500	1,59,900
Rs 25,00,000	5,69,400	3,19,800	2,49,600
Rs 50,00,000	13,49,400	10,99,800	2,49,600
Rs 1,00,00,000	32,00,340	29,25,780	2,74,560
Rs 5,00,00,000	1,92,36,750	1,89,24,750	3,12,000

Source: CA Naveen Wadhwa

How the marginal relief is computed?

Ans: The marginal relief is computed in the following manner:-

• (i) First the tax as per slab rate is computed on the total income.
• (ii) Tax payable on total income of Rs 12,00,000 on which rebate is available is Nil.
• Now the tax liability without marginal relief (in this case Rs 61,500) shall be compared with amount exceeding total income upto which rebate is available [in this case Rs 10,000, [i.e. Rs 12,10,000 – Rs 12,00,000]
• The marginal relief shall be computed by deducting the income exceeding Rs 12,10,000(i.e. Rs 10,000) from total tax liability determined in this case (i.e. Rs 61,500) as tabulated above.
• Therefore, in the above case marginal relief is Rs 51,500 (61,500- 10,000= 51,500) which is allowed.
• Tax payable is therefore ₹ 10,000 [Rs 61,500 – Rs 51,500]