Marginal relief for company

Dear Sumit,

In your case no marginal relief is available because additional tax paid on total income over Rs. 1 crore is less than the additional income over Rs. 1 crore.

Total tax liability calculated is as under:

tax on B I =          90lakh*30%                 =27 lakh

tax on CG =        20lakh*20%                 =4 lakh

total tax                                                = 31lakh

Add: surcharge @ 5% on 31 lakh            =1.55 lakh

total                                                     =32.55 lakh

add: eduaction cess @ 3% on 32.55 lakh =0.98 lakh

total tax liability                                      =33.53 lakh

:)

thanks for the answer amitesh. can u show me the workings how do u calculate whether marginal relief is available or not in case LTCG 12 lakhs instead of 20 lakhs?

Sure Sumit, it is as follows:

Tax on BI 90*30%      =27 lk

tax on CG = 12 *12% = 2.4 lk

total tax 29.4

tax on 90 +10=100 lakh=27+2=29 lk

additional tax over 100 lk = 29.4-29 = 0.4 lk

additional income over 100 lk =102-100 = 2 lk

surcharge and cess is to be added additionaly in above calculation.

conclusion: addl income > addl tax , thus mrginal relief is not available.

suppose there had not been CG and BI is 102 lakh then addl tax would be 102*30% -100*30% =3 lk where as addl income would be 102-100 = 2 lakh, in this case marginal relief is available and max tax to be paid is restricted to 2 lakh + sucharge and cess extra.

Thanks alot. is there any provision which enforce us to compute normal tax on pgbp over cap gain tax like what you have done above "tax on 90 +10=100 lakh=27+2=29 lk"?

can we do computation like tax on 12+88=100 lakhs=2.40+26.40=28.80lakhs ?

no such provision exist. its matter of tax plannig. pgbp attract higher rate of tax and cg lower rate of tax. hence i took 100% pgbp and 50% cg.