The government has given great relief to people with income up to Rs 12 lakh annually in Union Budget 2025. Such people will no longer need to pay tax. People working jobs will not have to pay tax on annual income of up to Rs 12.75 lakh annually. The reason for this is standard deduction. In the new tax regimen, the jobbers get a standard deduction of Rs 75,000. Those who do not do the job will not have to pay tax if they are slightly more than Rs 12 lakh. The reason for this is Marginal Relief. What is marginal relief, what does it mean?
What is Marginal Relief?
Marginal Relief is such a relief, due to which the taxpayer will get relief from paying more tax even if the annual income of the taxpayer is slightly more than Rs 12 lakh. This can be understood with the help of an example. Suppose a person’s annual income is Rs 12.1 lakh. Since this income is more than Rs 12 lakh, according to the tax slab, it will have to pay more than Rs 61,500 tax. However, due to marginal relief, its tax will be reduced to just Rs 10,000. This means that he will have to pay tax only on income of more than Rs 12 lakh.
Income 12.50 lakh then how much tax?
Due to margin relief, a person will have to pay more than Rs 12 lakh as income tax. If a person’s income is Rs 12,50,000, then if the margin relief is not received, his tax will be made 67,500. If he gets a marginal relief, he will have to pay only Rs 50,000 tax.
Income less than 12.75 lakhs and marginal relief
Marginal Relief will benefit only to such resident individuals, whose income will be less than Rs 12.75 lakh. If a person has an annual income of more than Rs 12.75 lakh, then he will not get the benefit of marginal tax relief. He will have to pay tax according to the income tax slab. The government believes that due to tax-freeing of income up to Rs 12 lakh and margin tax relief, taxpayer will have a tax saving of about Rs 1 lakh. This will increase people’s spending ability. More money will be available for spending in their hands.
Also read: Income Tax: What is the meaning of rebate on income up to 12 lakhs annually, how will the income be taxed more?
This is how tax
Tax experts say that the margin relief will provide a lot of relief from such people, whose income will be slightly more than Rs 12 lakh. If the income is slightly more than 12 lakhs, then tax will get more benefit. If the income is 12.30 lakh, then he will have to pay a tax of Rs 30,000. If the income is 12.50 lakhs, then it will have to pay a tax of Rs 50,000. In this way, as income will reach close to the range of 12.75 lakhs, its tax will increase.