Explaining Marginal Relief with Examples| How to Calculate Marginal Relief in Income Tax #marginalrelief #incometax #cadeveshthakur #viral #trending #youtubevideo #youtubevideos Marginal Relief and Surcharge Rates for FY 2023-2024 (AY 2024-2025) Marginal relief is a provision in the Indian income tax system that reduces the burden of surcharge on taxpayers whose income slightly exceeds the threshold limit for a higher surcharge rate. Surcharge rates are additional taxes levied on top of the income tax for those in the highest tax bracket. Here's a table summarizing the surcharge rates applicable for FY 2023-2024 (AY 2024-2025): Income Range Surcharge Rate on Income Tax Marginal Relief Up to Rs. 50 lakhs Nil Not applicable More than Rs. 50 lakhs and ≤ Rs. 1 Crore 10% Limited to the amount exceeding Rs. 50 lakhs More than Rs. 1 Crore and ≤ Rs. 2 Crore 15% Limited to the amount exceeding Rs. 50 lakhs More than Rs. 2 Crore and ≤ Rs. 5 Crore 25% Limited to the amount exceeding Rs. 50 lakhs More than Rs. 5 Crore 37%* Not applicable *Budget 2023 Update: Under the new tax regime, the highest surcharge of 37% has been reduced to 25% and will be applicable from 1st April 2023. Computation of Marginal Relief for Individuals FY 2023-24
(A): Calculate Tax on Total Income including the Surcharge (B): Calculate Tax on 1Cr Income including the Surcharge Amount Amount Assessee Mr. A Mr. A Age 46 46 Education Cess 4% on Income Tax Calculated 4% on Income Tax Calculated ₹ ₹ Total Income 1,01,00,000 1,00,00,000 Tax Calculation (FY 2023-24) ₹ Upto 2,50,000 NIL 2,50,010 to 5,00,000 5% [Sec 288A] - R/o Income Suppose Income 2,50,010 5% 12499.5 [Sec 288B] - R/o Tax 12,500 Tax Calculation: [Total Income minus 2,50,000] x5%
5,00,010 to 10,00,000 20% 1,00,000 Tax Calculation: [Total Income minus 5,00,000] x20%
More than 10,00,000 30% 1,12,500 Tax Calculation: [Total Income minus 10,00,000] x30% plus Tax Calculation: [Total Income minus 10,00,000] x30%
Tax on Total Income 1,12,500 + (1,01,00,000-10,00,000)*30% 9100000 1,12,500 + (1,00,00,000-10,00,000)*30% 2700000 1,12,500 + 27,30,000 2730000 1,12,500+27,00,000 tax is equal to 28,42,500 2842500 A 2812500 C Surcharge 15% 426375 B SC - 10% 281250 D
Total tax on 1,01,00,000/- A+B 3268875 Total Tax on 1,00,00,000/- 3093750 C+D
(C) Incremental Income above 1 Cr 100000 E
(D) Add: Incremental Difference and Tax Calculated on 1 Cr 3193750 C+D+E
If (A) is greater than (D), then Marginal Relief = (A) - (D) 75125
Tax Payable for the FY 2023-24 Tax on Total Income 3268875 Less: Marginal Relief 75125 Tax Payable 3193750 Health & Education Cess (4%) 127750 Total Tax Payable for the FY 2023-24 3321500
Explaining Marginal Relief with Examples| How to Calculate Marginal Relief in Income Tax
#marginalrelief #incometax #cadeveshthakur #viral #trending #youtubevideo #youtubevideos
Marginal Relief and Surcharge Rates for FY 2023-2024 (AY 2024-2025)
Marginal relief is a provision in the Indian income tax system that reduces the burden of surcharge on taxpayers whose income slightly exceeds the threshold limit for a higher surcharge rate.
Surcharge rates are additional taxes levied on top of the income tax for those in the highest tax bracket. Here's a table summarizing the surcharge rates applicable for FY 2023-2024 (AY 2024-2025):
Income Range Surcharge Rate on Income Tax Marginal Relief
Up to Rs. 50 lakhs Nil Not applicable
More than Rs. 50 lakhs and ≤ Rs. 1 Crore 10% Limited to the amount exceeding Rs. 50 lakhs
More than Rs. 1 Crore and ≤ Rs. 2 Crore 15% Limited to the amount exceeding Rs. 50 lakhs
More than Rs. 2 Crore and ≤ Rs. 5 Crore 25% Limited to the amount exceeding Rs. 50 lakhs
More than Rs. 5 Crore 37%* Not applicable
*Budget 2023 Update: Under the new tax regime, the highest surcharge of 37% has been reduced to 25% and will be applicable from 1st April 2023.
Computation of Marginal Relief for Individuals FY 2023-24
(A): Calculate Tax on Total Income including the Surcharge (B): Calculate Tax on 1Cr Income including the Surcharge
Amount Amount
Assessee Mr. A Mr. A
Age 46 46
Education Cess 4% on Income Tax Calculated 4% on Income Tax Calculated
₹ ₹
Total Income 1,01,00,000 1,00,00,000
Tax Calculation (FY 2023-24) ₹
Upto 2,50,000 NIL
2,50,010 to 5,00,000 5%
[Sec 288A] - R/o Income
Suppose Income 2,50,010 5% 12499.5
[Sec 288B] - R/o Tax 12,500
Tax Calculation: [Total Income minus 2,50,000] x5%
5,00,010 to 10,00,000 20% 1,00,000
Tax Calculation: [Total Income minus 5,00,000] x20%
More than 10,00,000 30% 1,12,500
Tax Calculation: [Total Income minus 10,00,000] x30% plus
Tax Calculation: [Total Income minus 10,00,000] x30%
Tax on Total Income
1,12,500 + (1,01,00,000-10,00,000)*30% 9100000 1,12,500 + (1,00,00,000-10,00,000)*30% 2700000
1,12,500 + 27,30,000 2730000 1,12,500+27,00,000
tax is equal to 28,42,500 2842500 A 2812500 C
Surcharge 15% 426375 B SC - 10% 281250 D
Total tax on 1,01,00,000/- A+B 3268875 Total Tax on 1,00,00,000/- 3093750 C+D
(C) Incremental Income above 1 Cr 100000 E
(D) Add: Incremental Difference and Tax Calculated on 1 Cr 3193750 C+D+E
If (A) is greater than (D), then Marginal Relief = (A) - (D) 75125
Tax Payable for the FY 2023-24
Tax on Total Income 3268875
Less: Marginal Relief 75125
Tax Payable 3193750
Health & Education Cess (4%) 127750
Total Tax Payable for the FY 2023-24 3321500