As per Section 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, HUF, etc.
The maximum marginal tax rate in India is the highest in the world. The Indian government has been criticized for imposing such a high tax rate on its citizens. Critics say that the high tax rate is discouraging investment and growth in the country. They also argue that it is unfair to impose such a high tax on people who are already struggling to make ends meet. Supporters of the high marginal tax rate say that it is necessary to raise revenue for the government. They argue that the rich should pay their fair share of taxes, and that the money raised through taxation can be used to fund social welfare programs and infrastructure projects.