What is the limit for Tax Free Income in India in 2025 For Salaried Individual?

For Salaried Individuals, an additional Standard Deduction of ₹ 75,000 is applicable over the ₹ 12 Lac Annual Income. Therefore, the threshold limit for Tax Free Income for Salaried Individual is ₹ 12,75,000.

Do I need to pay Taxes in full if I surpass the 12 Lac Annual Income mark by small margin ?

No. If the Margin Amount is under ₹ 75,000 (Approx), You can avail Marginal Relief under section 115BAC(1A). This will help in reducing Tax Liability.

What is Marginal Relief?

Marginal Relief is a provision under section 115BAC(1A) of Income Tax Department which allows Individuals and Residents to lower their tax liability if their income surpassess the ₹ 12 Lac Annual Income mark by small margin.

How to Calculate Marginal Relief?

Formula to Calculate Marginal Relief:

Marginal Relief = Original Tax Liability - Margin

Here, Original Tax Liability is the Tax Applicable on your Total Income.

How to Calculate Actual Tax Liability after availing Marginal Relief?

Formula to Calculate Actual Tax Liability:

Actual Tax Liability = Original Tax Liability - Marginal Relief

Here, Marginal Relief is the amount Calculated in "How to Calculate Marginal Relief".

Working Example to Calculate Marginal Relief...

Let's assume your Annual Income to be ₹ 12,20,000.

Original Tax Liability = ₹ 63,000 and Margin = ₹ 20,000

Marginal Relief = ₹ 43,000 ( ₹63,000 - ₹ 20,000)

Actual Tax Liability = ₹ 20,000

Is the Old Income Tax Regime still Active ?

Yes, The Old Income Tax Regime is still Active.

Tax Payer can choose between the Old Income Tax Regime and the New Income Tax Regime at the time of filing their taxes.