Income Tax Just Above ₹12 Lakh
No — earning just above ₹12,00,000 taxable income does not mean paying full slab tax on the whole amount. At ₹12,25,000, for example, marginal relief caps new-regime tax at ₹25,000 before cess, not the ₹63,750 slab-tax figure a naive calculation would suggest.
Your Details
Old Regime Deductions
Total: ₹0HRA exemption is not available under the new regime — it only affects the old-regime column.
Comparison
| Component | New Regime | Old Regime |
|---|---|---|
| Gross Income | ₹12,25,000 | ₹12,25,000 |
| Total Deductions | ₹0 | ₹0 |
| Taxable Income | ₹12,25,000 | ₹12,25,000 |
| Income Tax | ₹63,750 | ₹1,80,000 |
| Rebate u/s 87A | −₹38,750 | ₹0 |
| Surcharge | ₹0 | ₹0 |
| Health & Ed. Cess | ₹1,000 | ₹7,200 |
| TOTAL TAX PAYABLE | ₹26,000 | ₹1,87,200 |
New Regime
Old Regime
Recommendation
New regime saves you ₹0 this year.
The new regime wins here because your old-regime deductions (₹0) are below the ~₹6,62,498 break-even where the old regime starts to pay off.
Marginal relief applied under Section 87A — tax capped at the amount your income exceeds ₹12,00,000.
Client summary
Income Tax Regime Comparison
FY 2026-27 (AY 2027-28) · Income-tax Act 2025
| Component | New Regime | Old Regime |
|---|---|---|
| Gross Income | ₹12,25,000 | ₹12,25,000 |
| Taxable Income | ₹12,25,000 | ₹12,25,000 |
| Total Tax Payable | ₹26,000 | ₹1,87,200 |
The new regime wins here because your old-regime deductions (₹0) are below the ~₹6,62,498 break-even where the old regime starts to pay off.
Estimate for planning purposes — confirm with a CA before filing. practiceflow.in/tools/income-tax-calculator
The anxious question, answered directly
A very common worry: "my salary went up and now I'm just over ₹12 lakh — am I about to owe tens of thousands more in tax than a colleague earning ₹11,99,000?" The answer is no. Section 87A's marginal relief exists specifically to prevent that cliff-edge outcome. Instead of losing the entire rebate the moment taxable income crosses ₹12,00,000, the tax increases gradually — capped at exactly the amount by which income exceeds the threshold.
In practice, that means someone at ₹12,25,000 taxable income doesn't pay the full slab-rate tax on the entire amount — they pay only on the slice above ₹12,00,000, and even that slice is capped rather than taxed at the full marginal rate.
How far above ₹12 lakh does this protection extend?
The relief phases out on its own once ordinary slab tax on the income becomes smaller than the excess-over-₹12L figure — at that point the calculation naturally reverts to plain slab tax, since that's already the lower (and therefore applicable) number. This happens at a taxable income of roughly ₹12,70,588 under the current slab structure. Below that point, every rupee of extra income above ₹12,00,000 is taxed far more gently than the headline slab rate would suggest.
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Why this matters
Running this comparison for every client, every year, is where advisory value shows up — automate it with PracticeFlow.
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See PracticeFlow for CA FirmsEstimate for planning purposes, not tax advice — always confirm with a CA before filing.