If a company has 90 lakhs income from business and 20 lakhs from long term capital gain(taxable @ 20%) then what would be the tax liability & marginal relief ? thanks in advance (ignor MAT)
6 Replies
sumit dutta
(.)
(35 Points)
Replied 19 November 2013
Please help me , so many people are only viewing the question :(
amitesh
(service)
(44 Points)
Replied 21 November 2013
Dear Sumit,
In your case no marginal relief is available because additional tax paid on total income over Rs. 1 crore is less than the additional income over Rs. 1 crore.
Total tax liability calculated is as under:
tax on B I = 90lakh*30% =27 lakh
tax on CG = 20lakh*20% =4 lakh
total tax = 31lakh
Add: surcharge @ 5% on 31 lakh =1.55 lakh
total =32.55 lakh
add: eduaction cess @ 3% on 32.55 lakh =0.98 lakh
total tax liability =33.53 lakh
:)
sumit dutta
(.)
(35 Points)
Replied 21 November 2013
thanks for the answer amitesh. can u show me the workings how do u calculate whether marginal relief is available or not in case LTCG 12 lakhs instead of 20 lakhs?
amitesh
(service)
(44 Points)
Replied 22 November 2013
Sure Sumit, it is as follows:
Tax on BI 90*30% =27 lk
tax on CG = 12 *12% = 2.4 lk
total tax 29.4
tax on 90 +10=100 lakh=27+2=29 lk
additional tax over 100 lk = 29.4-29 = 0.4 lk
additional income over 100 lk =102-100 = 2 lk
surcharge and cess is to be added additionaly in above calculation.
conclusion: addl income > addl tax , thus mrginal relief is not available.
suppose there had not been CG and BI is 102 lakh then addl tax would be 102*30% -100*30% =3 lk where as addl income would be 102-100 = 2 lakh, in this case marginal relief is available and max tax to be paid is restricted to 2 lakh + sucharge and cess extra.
sumit dutta
(.)
(35 Points)
Replied 23 November 2013
Thanks alot. is there any provision which enforce us to compute normal tax on pgbp over cap gain tax like what you have done above "tax on 90 +10=100 lakh=27+2=29 lk"?
can we do computation like tax on 12+88=100 lakhs=2.40+26.40=28.80lakhs ?
amitesh
(service)
(44 Points)
Replied 26 November 2013
no such provision exist. its matter of tax plannig. pgbp attract higher rate of tax and cg lower rate of tax. hence i took 100% pgbp and 50% cg.
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