Marginal Relief given to the assessee whose total income exceeds Rs. 50,00,000/- or Rs. 1,00,00,000/- as the case may be. So, a minor increase in income which exceed the specified limit and increase the tax liability to a huge extent.
Relief:
Marginal relief is provided to ensure that the additional income tax payable including surcharge on excess of income over Rs. 50,00,000/- or Rs. 1,00,00,000/- is limited to the amount by which the income is more than Rs. 50,00,000/- or Rs. 1,00,00,000/-
Marginal Relief = Calculated Surcharge – 70% (Income – Rs. 50,00,000)
Similarly, relief shall also be provided where income exceeds marginally above Rs.1 crore. In that case, the aforesaid equation shall be changed accordingly.
Marginal relief is available in respect of surcharge only. It is not applicable in case of CESS.
Example
Mr. X aged 55 yrs. whose total income for Assessment Year 2018 – 19 is Rs.50,10,000/-Calculate total tax payable and also show working for calculation of Marginal Relief.
| Income | Calculation | Amount |
| Up to Rs. 2,50,000 | Nil | Nil |
| 2,50,001 – 5,00,000 | 2,50,000 * 5% = 12,500 | 12,500 |
| 5,00,001 – 10,00,000 | 5,00,000 * 20% = 1,00,000 | 1,00,000 |
| Above 10,00,000 | Balance 40,10,000 * 30% =12,03,000 | 12,03,000 |
| Total Tax Before Surcharge and CESS | 13,15,500 | |
| + Surcharge | 10% of 13,15,500 = | 1,31,550 |
|
(-) Marginal Relief |
Calculated Surcharge – 70% (Income – Rs.50 Lakh)
= 1,31,500 – 70% (50,10,000 – 50,00,000) = 1,31,500 – 7000 = 1,24,550 |
(1,24,550) |
| Tax Before CESS | 13,22,500 | |
| + CESS | 3% of 13,22,500 = 39,675 | 39,675 |
| Total Tax Payable | 13,62,175 |
Note: – The concept of marginal relief is that the amount of increase in income tax should not be more than the amount of increase in income.
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where to claim marginal relief above 5o lakhs income
If we consider education sess, person with 50L income still gets more post tax income than person with 51L income. How is this justified?
How will marginal relief will be available if there is a special income also, for example
Pgbp = 5,00,985
Hp= 67,96,453
LTCG u/s 112A = 26,83,657
STCG = 3,67,381
STCG u/s 111A =57,984
So in this prblm the total income is 1,04,06,460. So, marginal relief will be available or not?
Not available
how marginal relief will be calculated in case of Agriculture income plus normal income?/