Mon Feb 03 10:18:05 UTC 2025: ## Budget 2025 Brings Major Income Tax Relief, But With Nuances

**New Delhi** – Finance Minister Nirmala Sitharaman’s Budget 2025 announcement of significant income tax relief has left many taxpayers with more money in their pockets, but also some questions about the finer points. The headline grabber: individuals earning up to ₹12 lakh annually will pay no income tax under the new tax regime. This is achieved through a combination of a rebate and a less-publicized feature called “marginal relief.”

The rebate eliminates tax liability for those earning up to ₹12 lakh. However, marginal relief addresses a potential pitfall for those earning just above this threshold. It ensures that the tax payable on income exceeding ₹12 lakh doesn’t disproportionately increase. For instance, someone earning ₹12.10 lakh would typically owe ₹61,500 in tax; marginal relief reduces this to ₹10,000, minimizing the tax burden for those just above the ₹12 lakh limit.

This relief, however, is capped. It applies only to incomes up to approximately ₹12.75 lakh. Beyond this point, standard tax slabs apply. The maximum rebate under the new regime remains ₹60,000. Importantly, these benefits do not extend to income from sources like capital gains, lottery winnings, or other special-rate earnings. The marginal relief specifically applies to income taxed under Section 115BAC.

The updated tax slabs under the revised new tax regime [insert updated tax slabs here].

Experts anticipate a positive impact on the middle class. Manmeet Kaur, Partner at Karanjawala & Co, stated that the government’s move to raise the minimum tax-free slab from ₹7 lakh to ₹12 lakh, coupled with a ₹75,000 standard deduction, aims to boost both consumption and savings. While the changes bring welcome relief, understanding the nuances of the rebate and marginal relief is crucial for taxpayers to accurately calculate their tax liabilities.

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