What happens if your income exceeds ₹12 lakh by just ₹1?

₹12 lakh income? No tax.

₹12,10,000 income? ₹61,500 tax?

What happens if your income exceeds ₹12 lakh by just ₹1?

Did you know that earning just ₹1 extra above ₹12 lakh could shoot up your tax liability disproportionately?

That’s where Marginal Relief comes in!

It's a benefit under Section 87A read with Section 115BAC(1A) that prevents taxpayers from paying excessively high taxes just because their income slightly exceeds the tax exemption threshold.

Imagine you earn ₹12,10,000—just ₹10,000 over the threshold. Your tax shoots up to ₹61,500!

But Marginal Relief adjusts this. Instead of paying ₹61,500, you only pay ₹10,000, saving a whopping ₹51,500!

→ Applicable to resident individuals under the new tax regime.

→ Taxpayers with income up to ₹12 lakh pay zero tax under the new regime.

→ If your income exceeds ₹12 lakh but stays below ₹12.75 lakh, you get relief.

→ Beyond ₹12.75 lakh, no marginal relief is available.

→ Marginal relief does not apply to special income like capital gains, lottery winnings, etc.

Section 87A read with Section 115BAC(1A) ensures a fair tax structure so that minor income jumps don’t cause excessive tax burdens!

Are you making the most of Marginal Relief?