Definition of ‘Maximum Marginal Rate’ – Income Tax

As per S.2(29C) of Income Tax Act, 1961, unless the context otherwise requires, the term “maximum marginal rate” means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual, association of persons or, as the case may be, body of individuals as specified in the Finance Act of the relevant year.


In other words, the term maximum marginal rate of income tax refers to the applicable highest rate slab of income tax, mostly in the case of individuals.