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According to the FAQs issued by the government, in the new regime under Section 115BAC(1A), marginal relief is available to only resident individuals who have income “marginally above Rs 12 lakh”.
Marginal Relief In Income Tax Explained.
Even as the Union Budget 2025-26 has provided the tax relief for the middle class by exempting income tax on earnings up to Rs 12.75 lakh annually (including Rs 75,000 standard deduction), there is a confusion among taxpayers who are earning just above this threshold, let’s say Rs 13 lakh. However, the government has clarified that they will not be subject to income tax on their full earnings but they will be provided marginal relief. Here’s how it works:
According to the FAQs issued by the government, in the new regime under Section 115BAC(1A), marginal relief is available to only resident individuals who have income “marginally above Rs 12 lakh”.
Giving an example, it said, for a person having income of Rs 12,10,000 (after excluding standard deduction), in the absence of marginal relief, the tax, works out to be Rs 61,500 (5 per cent of Rs 4 lakh + 10 per cent of 4 lakh and 15 per cent of Rs 10,000). “However, due to marginal relief, the amount of tax to be actually paid is Rs 10,000.”
Marginal Relief: Detailed Calculation On How It Works
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 (instead of Rs 61,500).
Here’s a table for various income categories and the marginal relief available for them:
| Marginal Relief For Different Taxpayers | ||
|---|---|---|
| Income | Tax without Marginal Relief (Rs) | Tax actually payable with marginal relief (Rs) |
| Rs 12,10,000 | 61,500 | 10,000 |
| Rs 12,50,000 | 67,500 | 50,000 |
| Rs 12,70,000 | 70,500 | 70,000 |
| Rs 12,75,000 | 71,250 | 71,250 (No marginal relief) |
Importantly, the total income till which marginal relief is available is up to Rs 12,70,000. If you add a standard deduction of Rs 75,000, the upper annual income limit to avail marginal relief becomes Rs 13,45,000.
So, less the margin, more the marginal relief.
So, the maximum rebate available is Rs 60,000, which is there for a tax payer having income of Rs 12 lakh on which tax is payable as per the new slabs.