Twinkle Jain Explains Marginal Relief: How It Works & Who Can Benefit

Is Marginal Relief the Key to Lowering Your Tax Burden? For many taxpayers, a slight increase in income can push them into a higher tax bracket, resulting in a disproportionate increase in tax liability. But does earning just a little extra mean you should pay significantly more in taxes?

Finance influencer and Chartered Accountant Twinkle Jain explains how Marginal Relief, a provision under the new tax regime, ensures fairness by preventing taxpayers from facing an excessive tax burden just because their income slightly exceeds a certain threshold.

What is Marginal Relief?

Marginal Relief is a tax benefit under Section 87A (new tax regime) that reduces the sudden increase in tax liability when your income slightly exceeds the threshold for a higher tax rate. It ensures you don't pay way more tax just because you earned a little extra!

In simple terms, if your income slightly exceeds ₹12 lakh (or ₹12.75 lakh for salaried individuals), Marginal Relief ensures that your extra tax liability is not disproportionately high.

Who Can Get Marginal Relief?

Eligibility for Marginal Relief:

Available to:

• Resident individuals whose income exceeds ₹12 lakh (₹12.75 lakh for salaried individuals).

Not available to:

• Non-resident individuals.
• Hindu Undivided Families (HUFs).
• Other taxpayers outside the specified income range.

How Does Marginal Relief Work?

Marginal relief is provided so that the extra tax payable does not exceed the increase in income beyond ₹12 lakh (₹12.75 lakh in the case of salaried individuals).

Important: The above tax rates do not include cess and should be considered accordingly.

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Marginal Relief is a crucial provision that ensures fair taxation, especially for individuals whose earnings barely exceed ₹12 lakh. All taxpayers can now optimize their tax liability to make informed financial decisions.