Lesson 1 of 2 · 7 min
Slabs are marginal
Only the income sitting inside a slab is taxed at that slab’s rate, which makes the "a raise will leave me taking home less" fear arithmetically impossible.
Cross a slab boundary and your whole income jumps to the higher rate — that is what most people believe, and some of them turn down work over it. Each slab prices only the income that falls inside it. Nothing below the line is ever repriced.
| Income band | Rate on income in that band |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Your turn
Taxable income of ₹8,00,000 under the new regime. What is the tax before cess, in rupees?
Myth
“If I earn one rupee more I will move into a higher bracket and take home less.”
False
Impossible under a marginal system. Only the extra rupee is taxed at the higher rate. Where a threshold could genuinely create a cliff — the ₹12 lakh rebate, the ₹50 lakh surcharge — the law builds in marginal relief precisely to stop it.
So a raise can leave me poorer?
KabirTara
Kabirasking
My cousin turned down extra shifts because the money would push him into the next bracket and he would take home less. Is that a real thing?
Taraexplaining
No. He gave up money to dodge a tax that was never coming. The higher rate touches only the rupees above the line, never the ones below it.
Kabirasking
Then why does everybody say it?
Taraexplaining
Because 'bracket' sounds like a box you fall into. It is not a box, it is a shelf. Each layer of your income sits on its own shelf and is taxed at that shelf's rate.
Kabirasking
Fine, but what about the thresholds where a rebate runs out? Those must be cliffs.
Taraexplaining
The law saw that coming and wrote marginal relief in. Just above such a threshold, the tax is held down to roughly the amount you crossed by. The cliff gets shaved into a slope.
Check yourself
1 / 3
Kabir asks
Taxable income of ₹8,00,000 under the new regime. What is the tax before cess?
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