Tax Calculator: Finance Minister Nirmala Sitharaman has made a big announcement in Budget 2025. Now people with annual income up to Rs 12 lakh will not have to pay any income tax. This exemption will be available after adjusting the standard deduction and revised tax rebate. Earlier, where a tax rebate of Rs 25,000 was available on income up to Rs 7 lakh, now it has been increased to Rs 12 lakh.
Tax calculation on income of Rs 12.75 lakh (New Tax Regime)
If your annual salary is Rs 12.75 lakh, let’s see whether you have to pay tax or not. According to the new rules, people with annual income up to Rs 12.75 lakh will not have to pay any tax. Know how-
Standard Deduction: Rs 75,000
Taxable income after deduction: Rs 12,75,000 – Rs 75,000 = Rs 12,00,000
New Tax Regime slabs:
- Income up to Rs 4 lakh: 0% tax → Rs 0
- Rs 4 lakh – Rs 8 lakh: 5% tax → Rs 20,000
- Rs 8 lakh – Rs 12 lakh: 10% tax → Rs 40,000
- Total tax liability before rebate: Rs 20,000 + Rs 40,000 = Rs 60,000
- Tax rebate under section 87A: Rs 60,000
- Final tax liability: Rs 60,000 – Rs 60,000 = Zero
No tax up to Rs 12.75 lakh!
That is, there is no tax liability on annual income up to Rs 12.75 lakh, so your take-home salary will be Rs 12.75 lakh per annum. This means that people with income up to Rs 12.75 lakh can take the entire salary as take-home. They will not have to pay a single rupee of income tax.
Tax calculation for Rs 13 lakh annual income
Now, let us calculate the tax for people earning Rs 13 lakh annually under the new tax regime.
Standard Deduction: Rs 75,000
Taxable income after deduction: Rs 13,00,000 – Rs 75,000 = Rs 12,25,000
New tax regime slabs:
- Income up to Rs 4 lakh: 0% tax → Rs 0
- Income between Rs 4 lakh and Rs 8 lakh per annum: 5% tax → Rs 20,000
- Income between Rs 8 lakh and Rs 12 lakh per annum: 10% tax → Rs 40,000
- Income between Rs 12 lakh and Rs 12.25 lakh per annum: 15% tax → Rs 3,750
Total tax liability before cess: Rs 20,000 + Rs 40,000 + Rs 3,750 = Rs 63,750
Health and Education Cess (4%): Rs 2,550
After adding cess, the total tax liability will be: Rs 63,750 + Rs 2,550 = Rs 66,300
Net take-home salary: Rs 13,00,000 – Rs 66,300 = Rs 12,33,700
Now at first glance, you will feel that people earning Rs 12.75 lakh can bring home their entire salary by saving tax on the entire 12.75 lakh, while people earning Rs 13 lakh will be able to bring home only Rs 12.33 lakh after tax, which is less than that. Therefore, the government gives marginal relief i.e. partial relief to people earning a little above the exemption limit.
What is the marginal relief provision? (What is Marginal Relief Provision?)
Marginal Relief ensures that taxpayers whose income is slightly more than Rs 12 lakh are given tax relief, so that a person earning slightly above the exemption limit does not get less salary than a person below the limit. Therefore, the government provides partial relief.
Marginal relief calculation for Rs 13 lakh
- Additional income above Rs 12 lakh = Rs 1,00,000
- Tax liability without marginal relief = Rs 66,300
- Marginal tax liability should not exceed Rs 1,00,000.
To ensure that a person earning Rs 13 lakh per annum does not get less salary than a person earning Rs 12 lakh, the payable tax will be adjusted to Rs 25,000 instead of Rs 66,300. Thus, the net take home salary will be = Rs 13,00,000 – Rs 25,000 = Rs 12,75,000
Most Read Articles:
- Noida Metro Recruitment 2025: Golden opportunity to get a job in Noida Metro, will get Salary up to 2.8 lakhs
- IndiGo New Flight: Big news! IndiGo started a new direct service from this city, check the schedule
- Credit Card Link UPI: Link your credit card to UPI from home, know step-by-step guide
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
