But wait…
Nirmala Taai also announced:
5% tax on ₹4-8 lakhs
10% tax on ₹8-12 lakhs
That means ₹60,000 tax on ₹12 lakh income.
Then how is it tax-free? Let’s find out 👇
The Secret? Section 87A Rebate!
If your total income is ₹12 lakh or less, you get a special rebate under Sec 87A.
This rebate cancels out the ₹60,000 tax, making your final tax ZERO.
But what if you earn slightly over ₹12 lakh?
This rebate won’t apply. But don’t worry, there’s another relief:
→ Marginal Relief
If your income slightly exceeds ₹12 lakh, but your tax jumps too much, the government will reduce it using marginal relief.
Here’s how it works:
Income: ₹12.10L
Normal tax = ₹61,500
Marginal Relief applied → You only pay ₹10,000 (the excess over ₹12L)
Income: ₹12.50L
Normal tax = ₹67,500
Marginal Relief applied → You pay ₹50,000
Income: ₹12.75L+
No more marginal relief. You pay full tax.
Final takeaway:
✅ ₹12L or below? Pay zero tax.
✅ ₹12L – ₹12.75L? Marginal relief applies.
✅ Above ₹12.75L? No rebate, no relief. You pay full tax.
Want a full breakdown of Budget 2025? We’ve explained everything in our latest video!
https://www.youtube.com/watch?v=czMUlsMduyE&t=722s
