The reason for giving no income tax benefit to all those who draw a pay or pension of Rs 12,75,000 ( standard deduction is Rs 75,000 for salaried employees and pensioners) is to spur their purchasing power by lowering the income tax. All IT slabs have been made so that most of them get lesser income tax burden from Apr 2025.
For those beyond Rs 12,75,000 marginal relief is given for those earring a little more than this limit under Sec 87 A of Income Tax Act 1961.
For example if one earns total salary or pension of Rs 13,00,000 with standard deduction of Rs 75,000 the taxable income is only Rs 12,25,000. Such employees or pensioners are waived off Rs 12 lakhs and have to pay tax only as Rs 25,000 + 4% cess of Rs 1,000 = Rs 26,000.
But if one earns Rs 13,75,000 with Standard Deduction of Rs 75,000 he has to pay tax on normal slabs as shown below.
slab Taxable Amount IT Rate in % IT
upto 4 Lakhs 4 lakhs 0 0
4 - 8 lakhs 5 lakhs 5 20,000
8 - 12 lakhs 6 lakhs 10 40,000
12-13 lakhs 1 lakh 15 15000
Total IT 75000
IT Cess @ 4% 3000
Total IT to Pay 78000
So you can see if one earns closer to Rs 13 lakhs (full salary) are benefitted who constitute the maximum tax payers.
If one's income is more than Rs 13 lakhs, then he does not get any benefit in marginal relief.
