Marginal relief: what happens just above the ₹12 lakh rebate limit
Marginal relief limits the extra tax to the extra income when taxable income crosses a threshold, so earning ₹10,000 above the ₹12 lakh rebate cap costs at most ₹10,000 of tax instead of the full slab tax of about ₹61,500. It also applies at the surcharge thresholds of ₹50 lakh, ₹1 crore and ₹2 crore.
FY 2026-27 figures, rules verified 3 Sep 2026. Numbers assume basic at 40% of CTC, employer PF inside CTC and ₹2,400 professional tax unless stated.
Without marginal relief the rebate would create a cliff: ₹12,00,000 of taxable income pays nothing while ₹12,00,100 would pay over ₹60,000. Relief phases the tax in gradually until the slab tax is lower than the income above the cap, which happens at about ₹12.75 lakh of taxable income.
The same mechanism at the surcharge thresholds ensures that a salary just above ₹50 lakh never takes home less than one just below it.
The calculator applies both forms of relief automatically; the effect is visible in the tax curve on the income tax calculator, which flattens rather than jumps.
See the figure for your own salary on the in hand calculator.
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Related terms
- Section 87A rebate — The section 87A rebate cancels income tax of up to ₹60,000 for anyone whose taxable income is ₹12,00,000 or less under the new regime in FY 2026-27.
- Surcharge and cess — Health and education cess is 4% of income tax, charged on every taxpayer, which turns the 30% top slab into an effective 31.2%.