TMI BlogWhat is marginal relief and how it is computed?X X X X Extracts X X X X X X X X Extracts X X X X ..... kh by more than the amount of income that exceeds Rs. 50 lakh. In case of a company, surcharge is levied @ 7% (2% in case of foreign company) on the amount of income-tax if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 12% (5% in case of foreign company) on the amount of income-tax if total income exceeds Rs. 10 crore. Hence, in case of company whose total income exceeds Rs. 1 crore but does not exceeds Rs. 10 crore, marginal relief will be computed as discussed above, but in the case of company having total income above Rs. 10 crore marginal relief is available in such a manner that the net amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax and surcharge on to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as follows: Nil upto income of Rs. 2,50,000 5% for income above Rs. 2,50,000 but upto Rs. 5,00,000 20% for income above Rs. 5,00,000 but upto Rs. 10,00,000 30% for income above Rs. 10,00,000. Apart from above rates, cess will be computed separately. (2) Tax liability under marginal relief (i.e. after marginal relief) Tax on Rs. 50 lakh (at the above discussed rates) 13,12,500 Add: Income above Rs. 50 lakh 1,00,000 Tax liability under marginal relief 14,12,500 Conclusion Normal tax liability ( i.e. without marginal relief) comes to Rs. 14,76,750 and tax liability un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the total income of the taxpayer exceeds Rs. 1 crore. In this case, total income of Mr. Raja exceeds Rs. 1 crore and hence he will be liable to pay surcharge. Marginal relief is available in cases where the total income is slightly above Rs. 1 crore. The Computation of normal tax liability (i.e. liability without marginal relief) and tax liability under marginal relief (i.e. liability after marginal relief) will be as follows: (1) Normal tax liability (i.e. without marginal relief) Tax on total income before surcharge (*) 28,72,500 Add: Surcharge (@15% on the amount of income-tax of Rs. 28,72,500) 4,30,875 Tax liability after surcharge (i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax liability 34,25,500 Illustration for better understanding Mr. Karan is a businessman (age 35 years). His total income for the year 2023-24 amounted to Rs. 1,07,00,000. Will he be liable to pay surcharge, if yes, then how much and will he get the benefit of marginal relief? ** Surcharge is additional tax levied on the amount of income-tax. In case of taxpayers (i.e. Individuals/HUF/AOP/BOI/artificial juridical person) surcharge is levied @ 15% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 1 crore. In this case, total income of Mr. Karan exceeds Rs. 1 crore and hence he will be liable to pay surcharge. Marginal relief is available in cases where the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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