All you need to know about Marginal Relief on Surcharge under Income Tax Act

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The concept of marginal relief is designed to provide relaxation from levy of surcharge to a taxpayer where the total income exceeds marginally above Rs. 50 lakh, Rs. 1 crore, Rs. 2 crore or Rs. 5 crore as the case may be. Marginal relief is available in cases where the net total taxable income is slightly above Rs. 50 lakh, Rs.1 crore, Rs. 2 crore or Rs. 5 crore. The concept how and when it’s applicable is illustrated below.

	Marginal Relief applicable limit set by Income Tax Act	Surcharge Rate %
If Net Taxable Income for year is above 50 lac and is upto 1 CR	5,195,896	10%
If Net Taxable Income for year is above 1 CR lac and is upto 2 CR	10,214,695	15%
If Net Taxable Income for year is above 2 CR lac and is upto 5 CR	20,930,000	25%
If Net Taxable Income for year is above 5 CR	53,017,827	37%

How it Works

	Case 1 If Net Taxable Income for year is >= 50 lac and < 1 CR	Case 2 If Net Taxable Income for year is >= 50 lac and < 1 CR
If Net Taxable Income is	5,195,000	5,200,000
Surcharge Rate 10% applicable	10%	10%
Surcharge Rate 15% applicable	0%	0%
Marginal limit applicable	Yes	No
Income Tax Amount	1,371,000	1,372,500
Less u/s 87 A	—
Income Tax Amount Less 87A	1,371,000	1,372,500
Surcharge 10% Surcharge 15%	136,500 —	137,250 —
Surcharge Total Amount	136,500	137,250
Education Cess 3%	45,225	45,293
Total Tax Liability	1,552,725	1,555,043

How it Works

	Case 1 If Net Taxable Income for year is >= 1 CR	Case 2 If Net Taxable Income for year is >= 1 CR
If Net Taxable Income is	10,210,000	10,250,000
Surcharge Rate 10% applicable	10%	10%
Surcharge Rate 15% applicable	15%	15%
Marginal limit applicable	Yes	No
Income Tax Amount	2,875,500	2,887,500
Less u/s 87 A	—	—
Income Tax Amount Less 87A	2,875,500	2,887,500
Surcharge 10% Surcharge 15%	— 428,250	— 433,125
Surcharge Total Amount	428,250	433,125
Education Cess 3%	99,113	99,619
Total Tax Liability	3,402,863	3,420,244