Only marginal taxes payable by those earning just a little over Rs 12 lakh: Finance Minister

Finance Minister Nirmala Sitharaman on Tuesday said the government has brought in marginal tax relief for those earning a little beyond Rs 12 lakh annual income, which stands fully exempted from personal income tax as per the Union Budget 2025-2026 proposals.

Replying to discussions in Lok Sabha on the Finance Bill 2025, Sitharaman said if anyone earns Rs 10,000 above Rs 12 lakh annually, they would need to pay only Rs 10,000 as marginal tax.

"Without this marginal relief for taxpayers, if someone was earning Rs 10,000 above Rs 12 lakh a year, they would have had to pay Rs 61,500 as tax. Likewise, if someone earns Rs 20,000 over Rs 12 lakh, they would need to pay only Rs 20,000 as tax under our marginal relief scheme and can still go home with Rs 12 lakh. Without this marginal relief, a taxpayer earning Rs 20,000 annually above Rs 12 lakh would have had to pay Rs 63,500." So tax without marginal relief would have been much higher, she clarified.

She was answering queries about people to be taxed if they earn above Rs 12 lakh a year. In her Budget speech on February 1, the minister had said, "There will be no income tax payable up to an income of Rs 12 lakh — i.e. average income of Rs 1 lakh per month other than special rate income such as capital gains — under the new regime. This limit will be Rs 12.75 lakh for salaried tax payers, due to standard deduction of Rs 75,000.”

Tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them, she added.