1. Marginal relief is provided on Surcharge.

2. The surcharge rate for Individual/HUF/AOP/BOI are given below:-

Range of Income(INR) Surcharge Rate
>50 lac – upto 1 Cr 10%
>1 Cr – upto 2 Cr 15%
>2 Cr – upto 5 Cr 25%
>5 Cr – upto 10 Cr 37%
> 10 Cr 37%

3. The need for marginal relief is explained with below example:-

Point(1) Income(2) Tax as per Old Slabs (3)
A 50 lac 13,12,500
B 51 lac 14,76,750
B-A 1 lac 1,64,250

At an income level of 50 lac and 51 lac, an Individual is required to pay tax of INR 13,12,500 and INR 14,76,750 respectively. So with an increase in Income by INR 1 lac, the corresponding tax increases by INR 1,64,250. This was the prima facie hardship to the taxpayer. To mitigate this, Marginal Relief was bought into the Income tax.

4. Amount of Relief

Marginal Relief  INR (1,64,250 – 100,000)       INR 64,250

In case where net income exceeds INR 50 lacs but doesn’t exceed INR 1 Crore (in above example INR 51 lac), the amount payable as income tax and surcharge(INR 14,76,750) shall not exceed the total amount payable as income tax (INR 13,12,500) on total income of INR 50 Lac, by more than the amount of income(1 lac) that exceeds INR 50 Lac.

In others words, the difference of Column 3 (INR 1,64,250)  should not exceed difference of Column 2 (INR 1 lac)

*****

CA Tarique Khichi | [email protected]

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