Calculation of Marginal Relief in case of Individuals

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 calculation

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 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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More Under Income Tax

1. VENKATARAMANA KORADA says:

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?

3. Navneet Sharma says:

how marginal relief will be calculated in case of Agriculture income plus normal income?/

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