suppose if income from LTCG is 70 lacs and from normal income 32 lacs
thus,for calculation of marginal relief,can i take 100 lacs as LTCG and no normal income and get a high marginal relief?
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Calculation of marginal relief
Replies (6)
No, the normal income of assesse is computed under different head which are notified by Finance act (section 4 of IT act, 1961)
The tax liability of an assesse is computed on slab basis for normal income and tax liability on LTCG is on standard rate @ 20% . Hence in the given case, the assesse cannot claim the entire amount of income as a LTCG.
No,but for calculationof marginal relief,one has to compare the tax+surcharge with tax for a income of 100 lacs. So for this calculation,what amount of incomes should be taken in 100 lac amount.
Thanks
The total taxable income comes to 102 lacs(70+32) less deduction u/c VIA. So the tax liability Will be computed as under
1. First 2 lacs - nil
2. Next 3 lacs @ 10% = 30000
3. Next 5 lacs @ 20% = 100000
4. Remaining @ 30%= 660000
LTCG @ 20% = Rs. 1400000
Hence, total tax liability is Rs. 2190000 + SHEC @ 3%.
Net tax liability shall be Rs. 2255700
In case of a company there is no minimum limit. Here, total taxable income is 102 lacs. Hence, marginal relief is not applicable in case of individual.
calculation for individual resident
normal incom=32l
2.5 l= nil
2.5 l @ 10%= 25000
5l @ 20%= 100000
22l @ 30%=660000
LTCG 70 l @ 20%=1400000
tax=2185000
surcharge=218500
total=2403500
now i have to calculate marginal relief
for a total income of 100l,how much should i take as normal income and how much as ltcg?
Surcharge cannot be levied on individual, it is applicable only in case of companies.
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