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
2,50,001 – 5,00,000
5,00,001 – 10,00,000
Above 10,00,000
|
Nil
2,50,000 * 5% = 12,500
5,00,000 * 20% = 1,00,000
Balance 40,10,000 * 30% =12,03,000
|
Nil
12,500
1,00,000
12,03,000
|
Total
Tax Before Surcharge and CESS
+ Surcharge
(-) Marginal Relief
|
10% of 13,15,500 =
Calculated Surcharge - 70% (Income
– Rs.50 Lakh)
= 1,31,500 - 70% (50,10,000 - 50,00,000)
= 1,31,500 – 7000 = 1,24,550
|
13,15,500
1,31,500
(1,24,550)
|
Tax
Before CESS
+
CESS
|
3% of 13,22,500 = 39,675
|
13,22,500
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.