Marginal Relief

According to Income Tax Act 1961, a person whose income is higher than the income tax brackets that is 30% he or she is chargeable for a surcharge on the income tax. Surcharge on income tax is an additional amount paid by taxpayers. The objective behind the surcharge is financial rich people should pay to contribute a higher amount to the government in form of taxes rather than financially poor people.

The rate of surcharges generally ranges from 2% to 37%.

As per the Income-tax Act provisions, a relief from paying a surcharge if facilitated to individuals and companies that relief is called marginal relief. Marginal Relief reduces the burden of surcharge for many individuals and companies.

Marginal relief for individuals

Marginal relief is provided to certain taxpayers up to the amount of the difference between the excess tax payable (including surcharge) on the income above Rs.50 lakhs and the amount of income that exceeds Rs.50 Lakhs.

Marginal relief for companies

Marginal relief will only be provided to such companies having a total income of more than Rs.1 crore but less than Rs.10 crores i.e., the income tax payable (including surcharge) on the higher income should not exceed the income tax payable on Rs.1 Crore by more than the amount of income that exceeds Rs.1 crore.