All your misconceptions about new tax rules explained.

Ok so i am a CA student, i don't think people are able to properly understand tax slabs and the difference between basic exemption and rebate u/s 87a. so here i have tried my best to do so.

1.)firstly basic exemption is the 4l limit at which there is 0% taxation and rebate you get when your income is below 12l so all tax on that income i.e 60k is exempted.

2.)now the catch here is rebate u/s 87a is nit available for capital gains tax so even if ur income is below 12l you have to pay tax on capital gains while basic exemption of 4l can be claimed for capital gains as well.

3.)The 75k exemption is not exemption on your tax but a standard deduction from your salary income so you can't claim it on any other interest, dividend, business etc income.

4.) marginal relief-(it's a tricky one) if you have income above 12l but your income above 12l lets say 40k is below tax payable because your income exceeds 12l which is 60k then you can just surrender the 40k excess income instead of paying 60k tax which saves you 20k.

some examples-

a. if your salary income after deduction of 75k is 12l then your tax will be 60k and you'll get marginal relief of 60k so nil tax payable.

b. if your income is lets say 12.5l then your tax would be 60k + 15%of extra 50k which totals to 67500. now how marginal relief works is because of extra 50k income above 12l you have to oay 67.5k tax hence govt gives an option to surrender extra 50k income and save 17.5 k

c. if your salary is eg 15l then tax would be 60k till 12 l and 15% on extra 3l (12l-15l) which totals to 105000

Hope it helps and pls comment if i missed anything. cheers!