Income Tax Save: Tax will be saved even on income of more than 12 lakhs, know complete calculation

 

Budget 2025: If someone’s annual income is slightly more than 12 lakhs, then the government has given them marginal relief. Who will get it and how will it be calculated, understand the complete details.

Income Tax Save: In her budget, Finance Minister Nirmala Sitharaman has given a big relief to the middle class by giving income tax exemption to those with annual income up to Rs 12 lakh and changing the tax slabs in the new tax regime. This will save a total of Rs 80,000 for people earning Rs 12 lakh annually in the financial year 2025-26, while people whose income is Rs 24 lakh or more can save Rs 1 lakh 10 thousand. After adding the standard deduction of Rs 75,000 for the salaried class, no tax will have to be paid on income up to Rs 12.75 lakh. Under the tax slab proposed in the budget, if the income is more than Rs 12 lakh, then there will be no tax on the first income up to Rs 4 lakh. 5% tax will be levied on income between Rs 4 lakh to 8 lakh, 10% on Rs 8-12 lakh, 15% on Rs 12-16 lakh, 20% on income between Rs 16 to 20 lakh, 25% on Rs 20-24 lakh and 30% tax will be levied on income of more than Rs 24 lakh.

What if the income is more than 12 lakhs?

Now there is confusion that non-salaried people whose income is even one rupee more than 12 lakhs will have to pay 60 thousand rupees on income between 4 lakhs to 12 lakhs and full tax as per the tax slab on income above 12 lakhs. This is true to a large extent, but if someone’s annual income is slightly more than 12 lakhs, then the government has also given them marginal relief. Before understanding who will get it and how it will be calculated, you have to understand what is rebate and marginal relief. Relief is the deduction that taxpayers get in the new tax regime if they have an income of up to Rs 12 lakh. Marginal relief ensures that taxpayers whose income is slightly more than Rs 12 lakh are given relief in the total tax.

Total Income (in Rs.)	Tax at current rate (in Rs)	Tax after change (in rupees)	Benefit from changing slab (in rupees)	How much is the rebate (in Rs)	Total Profit (in Rs)
800000	30000	20000	10000	20000	30000
900000	40000	30000	10000	30000	40000
1000000	50000	40000	10000	40000	50000
1100000	65000	50000	15000	50000	65000
1200000	80000	60000	20000	60000	80000
1300000	100000	75000	25000	0	25000
1400000	120000	90000	30000	0	30000
1500000	140000	105000	35000	0	35000
1600000	170000	120000	50000	0	50000
1700000	200000	140000	60000	0	60000
1800000	230000	160000	70000	0	70000
1900000	260000	180000	80000	0	80000
2000000	290000	200000	90000	0	90000
2100000	320000	225000	95000	0	95000
2200000	350000	250000	100000	0	100000
2300000	380000	275000	105000	0	105000
2400000	410000	300000	110000	0	110000
2500000	440000	330000	110000	0	110000

 

First let’s understand what is tax rebate

First let’s understand rebate. Under Section 87A of the Indian Income Tax Act, provision is made to give rebate to those tax payers whose annual taxable income is less than a certain limit. Till now this limit was Rs 7 lakh, but in today’s budget speech, Nirmala Sitharaman has increased its limit to Rs 12 lakh in the new tax regime. Here it is just necessary to note that this rebate will be available only to individual income tax payers, no company or firm gets this rebate. Along with this, if the total income exceeds the limit of 87A, then the rebate will not be applicable. By now you have understood that according to the budget announcement, this limit will be Rs 12 lakh from the next financial year. That is, the maximum tax rebate limit for an individual income tax payer is Rs 60 thousand.

Now let’s talk about marginal relief

What will happen to those whose annual income is a little more than 12 lakhs and a little less than 13 lakhs. This is where the role of marginal relief begins. Let’s assume that someone’s annual income is 12 lakh 10 thousand rupees. Before understanding marginal relief, let us try to understand how much tax is being levied on that person. There will be no tax on the first 4 lakh rupees, the next 4 lakh rupees i.e. from 4 lakh 1 rupee to 8 lakh will be 20 thousand rupees at the rate of 5%, from 8 lakh 1 rupee to 12 lakh will be 40,000 rupees at the rate of 10% and then on the remaining 10 thousand rupees, a tax of 1500 rupees will be levied. In this way, a total tax of Rs 61,500 will be levied on the income of 12 lakh 10 thousand rupees. In such a situation, anyone may regret that the income increased by Rs 10,000 and the tax liability became Rs 61,500 more. Such taxpayers have been given relief in the new tax regime under section 115BAC (1A). Under this system, a person with an income of Rs 12 lakh 10 thousand will have to pay tax of only Rs 10,000 and not Rs 61,500.

How to calculate marginal relief

Let us understand from the above example. The total tax liability of a person with an income of 12 lakh 10 thousand is Rs 61,500. The calculation of how much marginal relief should be given to this person will be done by subtracting his income above ₹12,10,000 i.e. ₹10,000 from the total tax liability which is ₹61,500 in this case. This person will get marginal relief of ₹51,500 and he will have to pay a total tax of only 10 thousand rupees. If the calculation is done in this way, then relief of Rs 500 will be given on an income of Rs 12 lakh 70,000 and no relief will be given if the income is 12.75 lakh or more.