Marginal relief on surcharge

Hi

Pl refer: https://www.livemint.com/Money/nOeCiuNlBqm6izUmRPnqbK/Budget-2013-Tax-slabs-largely-unchanged-surcharge-for-rich.html

Thanks!!

Vaibhav

I feel in the link u gave, they have calculated it wrong.

Regards

Dear Shivani Mam,

take the taxable amount after adding surcharge on any figure above Rs. 1 crore (i.e. on which marginal relief could be applicable) and subtract such amount from the additional amount over Rs. 1 crore...

e.g. marginal relief on income of Rs. 1,00,50,000 would be

Tax on Rs. 1,00,50,000 (incl. surcharge):- 32,94,500 - Tax on Rs. 1,00,00,000 :- 28,30,000 i.e. exceeds by Rs. 4,64,500
or,
Income above Rs. 1,00,00,000 :- 50000 (whichever is lower)

Thus, tax will be increased by Rs. 50,000 only, not by Rs. 4,64,500. The difference amount of Rs. 3,94,500 would be the marginal relief.

Net tax liability on Income of 1,00,50,000:- Rs. 28,30,000 + 50,000 = Rs. 28,80,000

 

It may be useful..........

Please refer attached file.

If LTCG income is 98 lacs and business income is 3lacs...what is marginal relief for individual resident?

hello 

The marginal relief in case of income of Rs98 lacs from LTCG and Rs 3lacs from business income would be nil since the taxable income in this case is below Rs 1000000 for fy. 2014-15

LTCG Rs 98lacs tax @ 20% =1960000

B.income Rs3lacs tax @ 10% on Rs 50000 =5000

Out of above Rs 2.5lacs is exempt income.

So tax calculation will be Rs 1965000

Add Surcharge @ 10% Rs 196500 

Add Education cess @ 3% Rs 64845

Total tax Rs 2226345

hello 

procedure:-

step1:-   income tax calculated as per slabs                                                                                step2:-  surcharge 10 % of tax                                                                                                    step 3 :- education cess 3% of (tax + surcharge)

process:-

for example     if salary is 10074000                                                                                                               tax if calculated as per slabs = 2847200                                                                                           sur charge                 = 284720 (10% of above slabs)                                                         tax + surcharge                = 3131920                                                         

hint1 :-     incremental salary  (10074000-10000000)    =74000                                                                 tax if income is 10000000                          =2825000                                                             tax if income is 10074000                          =3131920                                                             incremental tax (3131920-2825000)            =306920                                                   note:-   sur charge is applicable only if income exceeds 10000000 ( one crore). but not if income is one crore. kindly, note it

              due to increase in incremental salary of 74000  we are paying tax of 306920 extra.  hence, it is a case where marginal relief is applicable.

how to calculate marginal relief:-                                                                                                                                          the concept of marginal relief is additional income tax levied if income is above one crore should be restricted to the increase in salary .                                                                 hence, marginal relief = increase in tax - increase in salary                                                                                       = 306920-74000                                                                                                                    = 232920    

hence, new tax is :-

taxable income = 10074000                                                                                                      tax                = 2847200                                                                                                     surcharge         = 284720 (tax * 10%)                                                                                        less:-                                                                                                                                      marginal relief = 232920                                                                                     

new surcharge = 51800                                                                                                          total cess       =(2847200+51800)*3%  =86970                                                                             hence total tax payable = 284720+51800+86970 = 2985970           

*thanks for giving me this oppurtunity............. i cant understood why marginal relief cannot be calculated including cess???? . please give me suggestion thank you....

Hi All,

As per Finance Act 2015, Surcharge rate is 12% if your total income exceeds INR 10,000,000 /- .

Marginal relief on surcharge is provided to reduce the hardship on Assessee due to disproportionate increase in Income to Tax 

Marginal Relief is availabe to following if your income falls in below mwtioned bracket starting from INR 1 Cr to INR 1,02,91,237 beyond this income you cannot take Marginal Relief benefit.

If there is no exemption then? Like in case of a company.

What if no exemption is allowed?

Meaning of highlighted words,

Provided word means like a exception of above paragraph,

Total income means ( income of all five heads - deduction u/s 80)

After calculation of total income we calculate taxable income as per provision of income tax. if income is more than 1crore is less  from  tax after tax on 1crore. then you claim marginal relief i.e tax up to your income after 1 crore.

Let suppose Total income is 105 lacs so income is more than 1 crore is 5 lacs, If income earn by 5 lacs and the corrosponding tax is more than 5lacs so nobody want a income of 5 lacs.

So govt given a marginal relief of tax, now tax is upto 5 lacs and tax is more than 5 lacs given as marginal relief.

Tax on 1.05 cr    = 29.8 lk        ( if income is 1 cr  tax = 28.3 lk) [ income more than 1 Crore is 5 lacs}

surcharge @ 10%= 2.98 lk          ( no surcharge          =   0.00)

Total   tax          = 32.78 lk        ( Total tax                   =  28.3 lk)

Compare Tax = 32.78-28.3= 4.48 lakh

Rs.4.48 lakh is less then from income of  Rs.5 Lakh, So their is no marginal relief is allowed.

My friend lovely already share a example in which marginal relief is playing.

Conclusion -

Marginal relief comes when income is slightly more from 1 Cr. like 1.03 crore.

In case of company

Tax on LTCG @ 20% on 98 Lacs     (1)          = 19.6 Lacs

Tax on Business income @ 30% on 3 Lacs (2) = 0.90 Lacs

Total                                           (3)            = 20.5 Lacs (tax on income of 1 Cr. = 20.2 lacs)(6)

Surcharge @ 5%                            (4)           = 1.025 lacs

Total                                           (5)             = 21.525 lacs

Now compare 5 & 6  ( 21.525 -20.2 = 1.325 lacs), i.e incraese in income of 1 lacs tax is increase by 1.325 lacs So relief of rs. 0.325 lacs(1.325 - 1.0).

( In calculating this answer two view possible in calculation of tax of rs. 1 cr. So as per tax payer benefit i take a view to calculate tax on 1 crore is rs. 98 lacs of LTCG and 2 lac of BI.)

very good Mr. Mahananda

Thanks