Marginal relief
This query is : Resolved
19 January 2014
sir plz make me understand the concept of marginal relief
20 January 2014
marginal relief is relevant to those assessees whose income exceeds the threshold limit for levy of surcharge marginally.
Now lets say someone's income is Rs 1.01 cr.
Now till 1 cr, his tax liability was 28.30 lakhs.
Now at 1.01 cr, if you apply surcharge straight away, the total tax liability shall be Rs 31.46 lakhs.
so with only 1 lakh increase in salary, the increase in tax liability is 3.16 lakhs. to avoid this heavy penalty for earning extra 1 lakh Rupee, marginal relief is provided to limit surcharge to the excess of income over 1 cr less additional tax on the same.
Please refer to file uploaded at the link below for computation of marginal relief for individuals as well as companies
https://www.caclubindia.com/forum/details.asp?mod_id=277277&offset=2#.UtwdF_u6bVI
Now lets say someone's income is Rs 1.01 cr.
Now till 1 cr, his tax liability was 28.30 lakhs.
Now at 1.01 cr, if you apply surcharge straight away, the total tax liability shall be Rs 31.46 lakhs.
so with only 1 lakh increase in salary, the increase in tax liability is 3.16 lakhs. to avoid this heavy penalty for earning extra 1 lakh Rupee, marginal relief is provided to limit surcharge to the excess of income over 1 cr less additional tax on the same.
Please refer to file uploaded at the link below for computation of marginal relief for individuals as well as companies
https://www.caclubindia.com/forum/details.asp?mod_id=277277&offset=2#.UtwdF_u6bVI
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