Marginal Relief – Surcharge on Income Tax (FY 2017-18/ AY 2018-19)

Marginal Relief from Income Tax Surcharge (FY 2017-18/ AY 2018-19)

Assessees can claim marginal relief from surcharge on income tax, to mitigate the effect of additional tax burden which is over and above the actual marginal addition in the income, for FY 2017-18/ AY 2018-19. Such relief can be claimed where surcharge gets attracted/ surcharge rate gets increased with marginal increase in income.

Surcharge is actually a tax on tax, i.e. additional tax on the income tax amount, based on slabs of assessee’s taxable income. Marginal increase in income from a slab where no/ lower rate surcharge is applicable to a slab where surcharge is applicable/ applicable at higher rate, may increase assessee’s additional tax liability even more than the increase in marginal taxable income due to application of surcharge/ higher rate of surcharge.

Marginal relief is basically meant for providing relief/ relaxation from levy of surcharge, where the taxable income  of a taxpayer marginally crosses Rs. 50 Lacs/ 1 crore / Rs. 10 crore, as the case may be. For rates of surcharge on Income Tax, please refer the post below:

Income Tax Surcharge Rates

Cases where net incremental/ marginal amount payable as ‘income-tax plus surcharge’ exceeds the net incremental/ marginal amount of ‘total income’ above Rs. 50 Lacs/ Rs. 1 Crore/ Rs. 10 Crore, such excess amount of additional tax burden shall be allowed as marginal relief in surcharge, i.e. the amount of surcharge shall be reduced to the extent of excess of increase in total liability of tax over increase in total income above Rs. 50 Lacs/ Rs. 1 Crore/ Rs. 10 Crore.

Marginal Relief from Surcharge for Individuals/ HUFs/ AOPs/ BOIs/ AJPs

Marginal relief is allowed to provide relaxation from application of surcharge to Individuals, HUFs, AOPs, BOIs, AJPs etc. taxpayers where the total income exceeds marginally above 50 Lacs or Rs. 1 crore.

In these cases, while computing surcharge the marginal relief in surcharge shall be available in such a manner that the net incremental/ marginal amount payable as ‘income-tax plus surcharge’ shall not exceed the net incremental/ marginal amount of ‘total income’ that exceeds Rs. 50 Lac/ 1 crore. So in all such cases, we need to compare the addition of tax liability including surcharge from income level of Rs. 50 Lac/ 1 crore to income level above Rs. 50 crore/ 1 crore vis-a-vis the increase in income from income level of Rs. 50 Lac/ 1 crore to income level above Rs. 50 Lac/ 1 crore.

In all such cases, where net incremental/ marginal amount payable as ‘income-tax plus surcharge’ exceeds the net incremental/ marginal amount of ‘total income’ above Rs. 50 Lac/ 1 crore, such excess amount of additional tax burden shall be allowed as marginal relief in surcharge, i.e. the amount of surcharge shall be reduced to the extent of excess of increase in total liability of tax over increase in total income above Rs. 50 Lac/ 1 crore.

Marginal Relief from Surcharge for Firms, Co-operative Societies and Local Authorities

Marginal relief is allowed to provide relaxation from application of surcharge to Firms, Co-operative Societies, Local Authorities, etc. taxpayers where the total income exceeds marginally above Rs. 1 crore, in the aforesaid manner.

Marginal Relief from Surcharge for Domestic/ Foreign Companies

Marginal relief is allowed to provide relaxation from application of surcharge to Domestic and Foreign Companies where the total income exceeds marginally above 1crore/ Rs. 10 crore, in the aforesaid manner.

Related Posts:

Income Tax Slabs/ Rates:Income Tax Cess, Surcharge & Rebate
Resident IndividualsEducation Cess Rates
NRIs/ HUFs/ AOP/ BOI/ AJPSurcharge Rates
Partnership Firms and LLPsMarginal Relief from Surcharge on Income Tax
Domestic CompaniesIncome Tax Rebate u/s 87A for Individuals
Foreign Companies
Co-operative Societies
Local Authorities

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  1. Vineet

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