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Marginal relief

srikanth (CA-FINAL) (45 Points)

11 August 2016

An assessee has agricultural income along with other income. Do agricultural income form part of total income while calculating marginal relief? If so, illustrate it with an example.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (168298 Points)
Replied 12 August 2016

First, include the Agricultural income while computing your income Tax liability. Example – Let us say that an Individual Assessee has a Total income of INR 7,50,000/- (excluding Agricultural income) and a Net Agricultural income of INR 100,000/-. Then, per this step, Tax shall be computed on INR 7,50,000/- + INR 1,00,000/- = INR 8,50,000/-. Thus,income Tax amount as per this step shall be INR 95,000/- for an individual who is below the age of 60 Years during the P.Y. 2014-15.
Second, add the applicable basic Tax slab benefit, as applicable, to the Net Agricultural income. Thus, per our example mentioned above we shall add INR 2,50,000/- to INR 1,00,000/- as the applicable Tax slab benefit available to an individual below 60 Years of age is INR 2,50,000/-. Now we will compute income Tax on INR 3,50,000/- (Tax slab benefit 2,50,000 + Net Agricultural income 1,00,000). The amount of Tax shall be INR 10,000/-.
Third, subtract the Tax computed in Second step from the Tax computed in First step = INR 85,000/-. Thus, this is the income Tax liability subject to deductions, Education cess etc., as applicable.
Courtesy CA Sahil Jolly

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srikanth (CA-FINAL) (45 Points)
Replied 20 August 2016

Dear Sir,

Please tell me whether agricultural income is included to see the limit of 1 crore of net income for calculating surcharge .If so, illustrate it with an example.

Thanking you Sir.