Surcharge is applicable on income tax if the income exceeds the specified limit. Marginal relief is available to the assessee if the amount of income tax and surcharge exceeds income tax payable on specified limit plus amount of income over the specified limit. The concept of marginal relief is that the amount of income tax should not be increased more than the amount of increased in income.
Marginal relief is available in respect of surcharge only. It is not applicable in case of education cess and Senior and higher education cess.
|Income tax without surcharge and EC and SHEC||28,40,000|
|Surcharge (15% of income tax)||4,26,000|
|Income tax without surcharge and EC and SHEC on Rs. 1 crore||28,25,000|
|Maximum amount of Surcharge
In this example the specified limit is rs. 1 crore for applicability of surcharge. When the amount of increased by rs. 50,000 the amount of surcharge comes to rs. 4,26,000. Therefore the amount of surcharge is limited to rs. 50,000 and rest 3,76,000 is allowed as marginal relief.