Marginal Relief Calculations for FY 2008-09

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Anushree (Querist)
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18 July 2011 Mr. XYZ senior citizen having Capital Gain income & Other Income for A.Y. 2009-10. His income other than Capital Gain is below Basic Slab Rate of 225000/- i.e. Rs.170000 but his Long Term Capital Gain is Rs. 838000/- so his total income is 10,08,000/-. So is he eligible for Marginal Relief for the Assessment Year 2009-10??
Please explain the Taxability of XYZ

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 July 2011 Due to marginal relief the assessee's liability remains limited to the income
exceeding Rs 1000000/-. It is provided in the case of "tax at normal rate."

In this case tax to be calculated as under -

Tax ay Normal Rate on 225000 NIL
Tax @20% Special Rate on 783000 ...156600

Question of marginal relief is irrelavent in this case.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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24 July 2011 In the modified case, where you have replaced income to 170000/-. For senior citizens I am taking the slab as given by you-

Tax ay Normal Rate on 225000 NIL
Tax @20% Special Rate on Balance Income
(1008000-225000=783000)783000 ...156600

Whatever is shortfall in Basic limit, has to be recouped with the LTCG. Consequently LTCG amount will be reduced by the amount, which has been utilised for the purpose of covering the " Basic limit Shortfall".

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