Marginal relief: under the new tax regime, if your taxable income is a little above ₹12 lakh, your income tax cannot be more than the amount by which you cross ₹12 lakh. Confirmed
Salaried people get a ₹75,000 standard deduction, so tax is nil up to ₹12.75 lakh salary. Relief works up to about ₹13.46 lakh salary.
FY 2026-27 (AY 2027-28) · Budget 2026-27 kept slabs and rebate unchanged · Updated 4 November 2026
Last updated: 4 November 2026
On this page
- Marginal tax relief at a glance
- What is marginal relief in income tax?
- New tax regime slabs for FY 2026-27
- How to calculate marginal relief, step by step
- Marginal relief examples (salaried, new regime)
- Why central government employees should check this
- Related guides and calculators
- Frequently asked questions
Marginal tax relief at a glance
| Item | New tax regime, FY 2026-27 |
|---|---|
| Rebate | Up to ₹60,000, so tax is nil if taxable income is ₹12 lakh or less Confirmed |
| Standard deduction (salary/pension) | ₹75,000 Confirmed |
| Nil tax for salaried | Gross salary up to ₹12,75,000 |
| Marginal relief rule | Tax payable ≤ taxable income above ₹12 lakh Confirmed |
| Relief ends at | Taxable income about ₹12,70,588 (salary about ₹13,45,588) Estimate |
| Cess | 4% health and education cess on the tax left after relief |
| Old tax regime | No such relief; rebate only up to ₹5 lakh income |
What is marginal relief in income tax?
Without it, earning ₹1 above ₹12 lakh would add about ₹60,000 of tax. That is unfair. So the law caps your tax at the extra income above ₹12 lakh.
You do not apply for it. Your DDO applies it in the monthly TDS, and the income tax portal applies it when you file your return.
New tax regime slabs for FY 2026-27
| Taxable income | Tax rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
How to calculate marginal relief, step by step
- Take your gross salary or pension and subtract the ₹75,000 standard deduction.
- Work out tax on the slabs above. At ₹12 lakh taxable income it is ₹60,000.
- Find the excess: taxable income minus ₹12,00,000.
- Your tax is the smaller of step 2 and step 3.
- Add 4% cess on that amount.
Tax payable = lower of (slab tax) or (taxable income − ₹12,00,000), plus 4% cess
Marginal relief examples (salaried, new regime)
| Gross salary | Taxable income | Slab tax | Excess over ₹12 lakh | Tax after relief + 4% cess |
|---|---|---|---|---|
| ₹12,75,000 | ₹12,00,000 | ₹60,000 | ₹0 | ₹0 (rebate) |
| ₹12,80,000 | ₹12,05,000 | ₹60,750 | ₹5,000 | ₹5,200 |
| ₹13,00,000 | ₹12,25,000 | ₹63,750 | ₹25,000 | ₹26,000 |
| ₹13,25,000 | ₹12,50,000 | ₹67,500 | ₹50,000 | ₹52,000 |
| ₹13,45,000 | ₹12,70,000 | ₹70,500 | ₹70,000 | ₹72,800 |
| ₹13,50,000 | ₹12,75,000 | ₹71,250 | ₹75,000 | ₹74,100 (no relief) |
Correction: an earlier version of this page used a ₹50,000 standard deduction and worked out ₹60,500 tax at ₹12.80 lakh. The right figures are ₹75,000 and ₹60,750 (₹5,200 after relief and cess).
Why central government employees should check this
With DA at 63% (from 1 July 2026), many Level 9–10 salaries now sit near ₹13 lakh. Example: Level 10 entry basic ₹56,100 + 63% DA + 30% HRA (X city) = ₹12,99,276 a year, before TA. Estimate
Taxable income is ₹12,24,276. Slab tax is ₹63,641, but marginal relief cuts it to ₹24,276, or ₹25,247 with cess. Estimate
A DA hike or arrears can push you over the line in one year. Check your pay with the 7th CPC salary calculator, your cell in the 7th CPC pay matrix and the latest rate on the DA hike tracker.
Related guides and calculators
- 7th CPC Level 10 salary: in-hand pay with DA and HRA.
- 8th Pay Commission salary calculator: expected pay at different fitment factors.
- DA arrears calculator: arrears can raise taxable income in one year.
Frequently asked questions
What is marginal relief under the new tax regime?
If taxable income is just above ₹12 lakh, the tax payable cannot be more than the income above ₹12 lakh. It stops a small rise in income from causing a big jump in tax.
Up to what income is marginal relief available?
Up to taxable income of about ₹12,70,588. For a salaried person with the ₹75,000 standard deduction, that is a salary of about ₹13,45,588.
Is salary up to ₹12.75 lakh tax-free in FY 2026-27?
Yes, under the new regime. ₹75,000 standard deduction brings taxable income to ₹12 lakh, and the ₹60,000 rebate wipes out the tax.
Is marginal relief available in the old tax regime?
No. This relief is only in the new regime. The old regime gives a rebate only up to ₹5 lakh taxable income.
Is cess payable after marginal relief?
Yes. 4% health and education cess is added to the tax left after relief.
Official sources: Income Tax Department: slabs and rebate, new regime · PIB: Budget 2026-27, new Income-tax Act from April 2026
Labels: Confirmed official order or release, linked · Estimate our calculation, not a government figure · Reported media or union report · Demand staff-side demand · Pending awaited
8thpaycalculator.in is an independent website, not a Government site. Check figures with your DDO, PAO or pension disbursing authority. Found an error? Report it. How we check facts: Editorial Policy. Updated 4 November 2026 by the 8thpaycalculator.in editorial team.
