What Specifically is the Surcharge?
An income tax surcharge is an extended fee that must be effectively paid in addition to the standard income tax. An additional tax is imposed on taxpayers who have a larger income cash inflow under a certain budget year.
Marginal Relief
The simple notion of marginal relief aims to give taxpayers great relief from implementing a surcharge if their total income is slightly more than Rs. 50 lakh or Rs. 1 crore, as the particular case may be.
Case 1
The annual income is higher than Rs.50 lakhs and less than Rs.1 crore.
The income tax due will be taxed to a 10% surcharge.
Suppose a person earns Rs.51 lakhs.
The total tax payable is Rs. 14,76,750 (10% surcharge).
However, if they had just earned Rs.50 lakhs, their tax burden would have accounted for Rs.13,12,500 (excluding cess).
Now, individuals would get marginal relief exactly equivalent to the difference between the surplus tax payable on higher income (Rs.14,76,750 less Rs.13,12,500 = Rs.1,64,250) and the amount of revenue that crosses Rs. 50 Lakhs (Rs.51,00,000 less Rs.50,00,000 = Rs.1,00,000).
The marginal relief amount is Rs.64,250 i.e., Rs.1,64,250 minus Rs.1,00,000.
Case 2
The total revenue exceeds Rs.1 crore but less than Rs.2 crore.
The income tax due will be taxed to a 15% surcharge.
Suppose a person earns Rs.1.01 crore.
The total amount of tax payable of Rs.32,68,875 (15% surcharge).
However, if they had made Rs.1 crore, the tax liability would be Rs.30,93,750. They would have to pay Rs.1,75,125 in income tax for making an excess of Rs.1,000,000.
As a likely result, the individual will receive a marginal relief determined by the difference between the excess tax liability on higher income (Rs.1,75,125) and the amount of money that surpasses Rs.1 crore (Rs. 1,00,000, in this case).
The marginal relief figure is Rs.75,125 i.e., Rs.1,75,125 minus Rs.1,00,000.