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Marginal Relief on Surcharge

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.

Example –

Particulars Amount
Assesee Status Individual
Income 1,00,50,000
Assessment Year 2017-18
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
(1,00,50,000-1,00,00,000)
50,000

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.

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