Marginal Relief on Income Tax 2025 Detailed Explanation, Marginal Relief Calculator. The Finance Minister has while announcing the Finance Bill 2025 has announced the New Income Tax Slab Rates in New Regime. Among the Benefits, the Marginal Relief is one of the Major Relief announced for the Financial Year 2025-26 in Income Tax. Here Comprehensive information on Marginal Relief, FAQs, How to Calculate the Marginal Relief, Marginal Relief Calculator for 2025-26 is provided below.
Income Tax 2025 as per the Finance Minister Speech
First let us see the Detailed speech of the Finance Minister on Income Tax Slab Rates 2025-26
Personal Income- tax Reforms with special focus on middle class
Democracy, Demography and Demand are the key support pillars in our journey towards Viksit Bharat. The middle class provides strength for India’s growth.
In recognition of Middle Class contribution, we have periodically reduced their tax burden. Right after 2014, the ‘Nil tax’ slab was raised to ` 2.5 lakh, which was further raised to ` 5 lakh in 2019 and to ` 7 lakh in 2023.
This is reflective of our Government’s trust on the middle-class tax payers. I am now happy to announce that there will be no income tax payable upto income of ` 12 lakh (i.e. average income of ` 1 lakh per month other than special rate income such as capital gains) under the new regime. This limit will be ` 12.75 lakh for salaried tax payers, due to standard deduction of ` 75,000.
Slabs and rates are being changed across the board to benefit all tax-payers. The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment.
Tax Slab Rates 2025 in New Tax Regime
The New Income Tax Slab Rates 2025 in New Tax Regime are as follows:
| Income Bracket | Tax |
|---|---|
| 0-4 lakh rupees | Nil |
| 4-8 lakh rupees | 5 per cent |
| 8-12 lakh rupees | 10 per cent |
| 12-16 lakh rupees | 15 per cent |
| 16-20 lakh rupees | 20 per cent |
| 20- 24 lakh rupees | 25 per cent |
| Above 24 lakh rupees | 30 per cent |
The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with examples. A tax payer in the new regime with an income of ` 12 lakh will get a benefit of ` 80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of ` 18 lakh will get a benefit of ` 70,000 in tax (30% of tax payable as per existing rates).
A person with an income of ` 25 lakh gets a benefit of ` 1,10,000 (25% of his tax payable as per existing rates).
A person with an income of ` 25 lakh gets a benefit of ` 1,10,000 (25% of his tax payable as per existing rates).
Rebate on income-tax
Resident individual with total income up to ` 7,00,000 do not pay any tax due to rebate under the new tax regime. It is proposed to increase the rebate for the resident individual under the new regime so that they do not pay tax if their total income is up to ` 12,00,000. Marginal relief as provided earlier under the new tax regime is also applicable for income marginally higher than ` 12,00,000.
What is Marginal Relief ? How is the marginal relief available to individuals?
Marginal relief as provided earlier under the new tax regime is also applicable for income marginally higher than ` 12,00,000.
For income above 12 lac, in the case of resident individuals, marginal relief shall be allowable
How is the marginal relief available to individuals?
In the new regime under section 115BAC(1A), marginal relief is available to only resident individuals who have income marginally above Rs. 12 lacs. 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 lacs+10% of 4 lac and 15% of Rs.10 thousand).
However, due to marginal relief, the amount of tax to be actually paid is Rs. 10,000/-.This is exclusive article by apteachers.in website written by Zakir Ali.
How much tax will be paid by a tax payer having income of Rs 12,10,000?
The tax liability on such tax payer by way of slabs only is Rs. 61,500. How ever a person having Rs 12 lac 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 lacs is required to pay only marginal amount of tax equal to the amount of income above Rs 12 lacs so that his carry home is also Rs 12 lacs. In this case he will be required to pay a tax of Rs 10,000.Marginal Relief in New Tax Regime 2025 Illustration Table
| Income | Tax without Marginal relief (Rs.) | Tax actually payable with marginal relief |
| 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] |
| Annual income | Taxable income after standard deduction | Tax liability | Actual tax liability after Marginal Relief | Marginal relief |
|---|---|---|---|---|
| 12,80,000 | 12,05,000 | 60,750 | 5,000 | 55,750 |
| 12,90,000 | 12,15,000 | 62,250 | 15,000 | 47,250 |
| 13,00,000 | 12,25,000 | 63,750 | 25,000 | 38,750 |
| 13,20,000 | 12,45,000 | 66,750 | 45,000 | 21,750 |
| 13,40,000 | 12,65,000 | 69,750 | 65,000 | 4,750 |
| 13,45,588 | 12,70,588 | 70,588 | 70,588 | 0 |
How the marginal relief is computed?
The marginal relief is computed in the following manner:-(i) First the tax as per slab rate is computed on the total income.
For e.g. In the answer given to quesⅥon no.15 above, tax on the total income of Rs. 12,10,000/-shall be computed in following steps:
| Sl.No. | Amount to be charged (out of total income of Rs. 12, 10,000/-) | Tax Amount as per slab rates |
| 1. | Initial amount of 4 lac | Nil (being basic exempⅥon) |
| 2. | Tax on subsequent amount of 4 lac (from 4 lac to 8 lac) | Rs. 20,000 (being 5% of Rs. 4 lac) |
| 3. | Tax on subsequent amount of 4 lac (from 8 lac to 12 lac) | Rs. Rs. 40,000/- (being 10% of Rs. 4 lac) |
| Tax on balance amount of Rs. 10,000/- | Rs. 1500 ((being 15% of Rs. 10,000) | |
| Aggregate tax liability | Rs. 61, 500/- |
- (ii) Tax payable on total income of Rs. 12,00,000/- on which rebate is available is Nil.
- (iii) 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]
- (iv) 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.
- (v) Therefore, in the above case rebate by way of marginal relief is Rs. 51,500 (61,500/- 10,000/-= 51,500/-) is allowed.
- (vi) Tax payable is therefore Rs. 10,000 [Rs. 61,500-Rs.51,500]
Ans. The total income till which marginal relief is available is near about Rs. 12,75,000/-.
What is the difference between rebate and marginal relief?
Rebate is the deducⅥon from tax which is available to tax payers having income upto Rs. 12 Lacs in the new regime. Marginal relief ensures that taxpayers having income marginally higher than Rs. 12 lacs do not pay tax more than the income in excess of 12 lacs.Marginal Relief Online Calculator
Here is the Simple but powerful Income Tax Calculator for AP and Telangana Employees which includes Marginal Relief for the Financial Year 2025-26. Employees can easily calculate the Income Tax, TDS and Marginal Relief for 2025-26 FY.
How to Use the Income Tax Online Calculator
- Click the Link given below.
- Select the State
- Select the Basic
- Select the HRA Percentage
- Select the Increment Month
- Select Pension Type
- Enter the Basic Savings
- Click on Calculate Button
Frequently Asked Questions
Q- What is the limit of marginal relief in the new tax regime?The Income Tax Act offers a marginal relief on an income exceeding Rs.12.75 lakhs, i.e., tax-free, to help taxpayers reduce their tax burden.
Q- Is surcharge applicable in the new tax regime?
Yes, Budget 2023 extended the benefit of marginal relief to the new regime too. The maximum surcharge that can be imposed on the tax payable by an individual is capped at 25% when opting for the new tax regime.
Q- What is the marginal relief under section 87a new tax regime?
In the financial year 2025-26 (Assessment Year 2026-27), under the new tax regime, the rebate limit has been raised to Rs. 12,00,000. This implies that a resident individual with a taxable income of up to Rs. 12,00,000 will be entitled to receive Rs. 60,000 or the amount of tax payable (whichever is lower) as tax relief.
Q- Who is eligible for marginal relief?
The introduction of marginal tax relief in the new tax regime, as outlined in the Union Budget for FY24, provides significant benefits to individuals whose income slightly surpasses the tax-free limit of Rs. 12.75 lakh. This initiative is welcomed as it enables individuals in this bracket to pay considerably less tax.
Q- How to calculate surcharge rate?
To compute the surcharge, begin by determining the income tax on the amount totaling Rs. 18 lakh. With an applicable surcharge rate of 10%, the surcharge amount is calculated as 10% of Rs. 18 lakh, resulting in Rs. 1.8 lakh.
