See exactly how much tax you owe the moment you cross the ₹12L or ₹5L Section 87A rebate cliff — with marginal relief built in.
What Is a Tax Cliff Calculator?
A tax cliff calculator shows you what happens the moment your income crosses the Section 87A rebate limit: ₹12,00,000 in the new regime, ₹5,00,000 in the old one. One rupee over that line and your tax bill can jump by tens of thousands. This tool is built for salaried employees close to appraisal season, freelancers watching their year-end numbers, and small business owners deciding whether to book one more invoice this financial year. If you're an NRI, note that Section 87A doesn't apply to you at all. The cliff logic below is for resident individuals only.
Most people find out about this cliff the hard way. They see "income up to ₹12 lakh is tax-free" on a news site, assume ₹12,50,000 must be close to tax-free too, and get a shock when Form 16 shows otherwise. This calculator exists so you check the actual number before you make a decision, not after.
Tax first gets computed on slab rates. Then Section 87A checks if your income sits within the rebate zone.
New Regime (Section 115BAC):
If Taxable Income ≤ ₹12,00,000 → Rebate = min(Slab Tax, ₹60,000) → Tax = ₹0
If Taxable Income > ₹12,00,000 → Excess = Taxable Income − ₹12,00,000
If Slab Tax > Excess → Marginal Relief = Slab Tax − Excess → Tax = Excess
Else → Tax = Slab Tax (no relief needed)
Old Regime:
If Taxable Income ≤ ₹5,00,000 → Rebate = min(Slab Tax, ₹12,500) → Tax = ₹0
If Taxable Income > ₹5,00,000 → No rebate, no marginal relief. Full slab tax applies.
The new regime softens its cliff with marginal relief. The old regime doesn't. Cross ₹5,00,000 by even ₹1 and you owe full tax with zero cushion. Both figures come straight from Section 87A of the Income-tax Act, 1961, as amended by the Finance Act, 2025. You can check the bare Act text yourself at incometaxindia.gov.in.
Here's the part that trips people up. Marginal relief doesn't mean your tax stays low forever above ₹12L. It just means the increase can't outpace your extra income, and only until taxable income reaches roughly ₹12,75,000. Past that, you're back to paying the full slab amount, no different from someone on ₹20L or ₹24L.
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Priya is salaried, on the new regime, earning ₹12,76,000 a year.
Step 1 (Taxable income): ₹12,76,000 − ₹75,000 standard deduction = ₹12,01,000.
Step 2 (Slab tax): Nil up to ₹4L, 5% on ₹4-8L (₹20,000), 10% on ₹8-12L (₹40,000), 15% on the remaining ₹1,000 (₹150). Total = ₹60,150.
Step 3 (Check the cliff): Taxable income exceeds ₹12,00,000 by just ₹1,000 (the excess).
Step 4 (Marginal relief): Since slab tax (₹60,150) is higher than the excess (₹1,000), relief kicks in. Relief = ₹60,150 − ₹1,000 = ₹59,150.
Step 5 (Tax after relief): ₹60,150 − ₹59,150 = ₹1,000. Add 4% cess (₹40). Final tax = ₹1,040.
Now compare that to Priya's twin, Farida, who earns exactly ₹12,75,000 (taxable income ₹12,00,000). Her tax is zero. So earning just ₹1,000 more than Farida costs Priya ₹1,040 in tax. That's marginal relief working as designed. It caps the jump at roughly the size of the extra income, instead of letting the full ₹60,150 liability fall on her at once.
Budget 2026 kept the new regime slabs and the ₹12,00,000 / ₹60,000 rebate structure from Budget 2025 unchanged for FY 2026-27. For FY 2025-26 (AY 2026-27), the effective nil-tax ceiling for a salaried person is ₹12,75,000 gross, that means ₹12,00,000 taxable income after the ₹75,000 standard deduction. The Income Tax Department's official FAQ on Section 87A confirms marginal relief phases out entirely once taxable income touches ₹12,75,000. Beyond that point you're back to paying full slab tax with no cushion.
Check your own numbers against these before you file.
Yes, under the new regime, if your taxable income after standard deduction is ₹12,00,000 or below. For a salaried person, that works out to roughly ₹12,75,000 gross. Cross it and marginal relief cushions the jump, but only up to about ₹12.75L taxable income.
Because the old regime has no marginal relief provision. The rebate simply stops the moment taxable income crosses ₹5,00,000, and you owe full slab tax from rupee one of that slab. It's a genuine cliff, not a slope.
Broadly yes, within the relief zone. Your tax increase gets capped at roughly the amount by which you crossed ₹12,00,000. Once taxable income passes about ₹12,75,000, relief stops and full slab tax applies again.
No. The rebate is only for resident individuals. NRIs pay tax on India-sourced income as per slab rates from the first rupee, with no ₹12L or ₹5L exemption to lean on.
The new regime, by design. Its marginal relief mechanism smooths the transition past ₹12 lakh. The old regime's ₹5 lakh cliff has no such cushion. It's the sharper of the two.
No, and it doesn't need to. Surcharge only kicks in above ₹50,00,000, well past the rebate cliffs this tool is built to analyse. For income at that level, use Toolisky's Salary Tax Calculator instead.
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