The new tax regime introduced in India in 2020 offers the option of availing marginal relief. Marginal relief is a provision that helps taxpayers reduce the impact of higher taxes on their income.
Here are some benefits of marginal relief in the new tax regime:
- Reduces tax burden: Marginal relief helps taxpayers reduce their tax liability by ensuring that they do not end up paying more tax due to a higher tax rate. It ensures that taxpayers are not penalized for earning just a little more than the threshold limit.
- Provides flexibility: The new tax regime offers taxpayers the flexibility to choose between the old and new tax regimes. If a taxpayer chooses to opt for the new tax regime, they can still avail marginal relief.
- Encourages higher income: Marginal relief can encourage taxpayers to earn more income without worrying about getting taxed at a higher rate. This can promote entrepreneurship and investment, which can ultimately benefit the economy.
- Increases disposable income: Marginal relief can increase disposable income, as taxpayers will not have to pay excessively higher taxes on their income. This can help taxpayers save money and invest in other areas, leading to economic growth.
Overall, marginal relief in the new tax regime can be beneficial for taxpayers as it provides relief from higher taxes, promotes higher income, and increases disposable income.