Marginal Tax Relief for Income exceeding ₹7 Lakhs under new regime: Budget 2023

The government has brought marginal relief to small-income taxpayers to reduce the tax burden whose income exceeds ₹7 lakhs under the new tax regime. This relief will be available from AY 2024-25, beginning on April 1, 2023.

This means, that if your taxable income is slightly over ₹7 lakhs, the additional amount won’t be taxed at the same rate.

The Budget 2023 made changes in the income tax slabs under the new tax regime. If your taxable income is up to ₹7 lakhs, then you’re eligible to claim a rebate of ₹25,000 and will not be required to pay income tax.

But what if one earns just ₹1000 more above ₹7 lakhs, i.e., ₹7,01,000? then, has to pay taxes of ₹25,100?

So, here, the government is offering the benefit of marginal relief under the new regime, If your taxable income is between ₹7 - ₹7.5 lakhs after claiming eligible deductions. So that one cannot end up paying higher taxes due to a marginal increase in income above ₹7 lakhs.

Marginal relief is nothing but a reduction in the amount of tax if your income is only slightly higher than the threshold limit.

From the above case if your total income is ₹7,01,000, then the tax payable will be ₹1,000 instead of ₹25,100.

The marginal relief facility will only be available up to ₹7.5 lakhs. Above that, the tax payable will be based on the applicable slab rate.

Refer to the table, for a better understanding of taxable income considering marginal relief

However, if one opts for the old tax regime in FY 2023-24, then they’re not eligible to take the benefit of marginal tax relief.

If any questions, ask them out here!