There have been articles circulating in social media that there is zero tax liability up to Rs 12 lakhs (excluding standard deduction) and if the income increases by one rupee, tax liability shall be greater than Rs. 60,000 resulting in less money in the hands of the taxpayer. However, this interpretation is misleading and incorrect.
The following table illustrates how this provision works:
Pre-tax Income |
Tax calculated as per tax slabs |
Marginal Tax Relief |
Tax after marginal tax relief |
Post-tax Income |
(A) |
(B) |
(C) |
(D) = (B) – (C) |
(A) – (D) |
12,00,000 |
– |
– |
– |
12,00,000 |
12,10,000 |
61,500 |
51,500 |
10,000 |
12,00,000 |
12,20,000 |
63,000 |
43,000 |
20,000 |
12,00,000 |
12,30,000 |
64,500 |
34,500 |
30,000 |
12,00,000 |
12,40,000 |
66,000 |
26,000 |
40,000 |
12,00,000 |
12,50,000 |
67,500 |
17,500 |
50,000 |
12,00,000 |
12,60,000 |
69,000 |
9,000 |
60,000 |
12,00,000 |
12,70,000 |
70,500 |
500 |
70,000 |
12,00,000 |
12,75,000 |
71,250 |
– |
71,250 |
12,04,750 |
As can be seen for all income levels, the post-tax money in hand never goes below Rs 12 lakhs due to the marginal relief of taxes provided under the Income Tax Act.
By: Vishal Shah, SEBI Registered Investment Advisor and founder of Bachhat
Feb 2, 2025
Disclaimer: This is not a financial advice and the readers should reach out to registered investment advisors for any financial advice. Registration granted by SEBI, membership of BASL and certification from National Institute of Securities Markets (NISM) in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.)
For a comprehensive guide on this topic, read our blog: Budget from the lens of financial planning. It provides detailed information and expert insights you won’t want to miss!
SEBI Registration Details
Registered Name: Vishal Bharat Shah | RIA No: INA000019220 | Reg. Type: Individual | Validity: Perpetual | Reg. address: C302, Lorelle, Datta Mandir Rd, Wakad, Pune 411057
Disclaimer: Registration granted by SEBI, membership of BASL and certification from National Institute of
Securities Markets (NISM) in no way guarantee performance of the intermediary or provide any
assurance of returns to investors.
Investment in securities market are subject to market risks. Read all the related documents
carefully before investing.
Copyright @2024 Bachhat, All rights reserved
WhatsApp us