Income Tax Surcharge & Marginal Relief Calculation A.Y.2022-23/A.Y.2023-24: There is an additional charge on income tax called an income tax surcharge. As per the guidelines issued by the IT Department, the rate of surcharge affects entities whose income is more than Rs. 50 Lakh in a financial year.
The surcharge is subject to marginal relief. We will discuss the marginal relief for ay 2023-24/2022-23 in detail. Please read the complete article and example below. So, it means if you are earning above 50 lakh you will have to pay extra income tax which is called a surcharge.
The surcharge will be applicable at different rates for different income ranges as given below. You will find here the complete guidance over income tax surcharge and marginal relief applicable for A.Y. 2023-24 & A.Y.2022-23
Surcharge Calculation on Income Tax
The surcharge is applicable to the following income range. The following table shows which income ranges are eligible for a surcharge on income tax. But you must keep in mind that the above income range is eligible also for marginal relief. So calculate surcharge as per marginal relief applicability. If you found any difficulty to calculate marginal relief then you should use our Marginal Relief Calculator for A.Y.2023-24 & A.Y.2022-23.
| Assessee Status | Net Income Range | Surcharge % on Income Tax |
|---|---|---|
| Individuals/HUF/AOP/BOI/Artificial Juridical Person | 0 Rs.50 Lakh | Nil |
| Rs.50 Lakh to Rs.1 Crore | 10% | |
| Rs.1 Crore to Rs.2 Crore | 15% | |
| Rs.2 Crore to Rs.5 Crore | 25% | |
| Above Rs.5 Crore | 37% | |
| Firm/Local Authority | 0 to Rs.1 Crore | Nil |
| Above Rs.1 Crore | 12% | |
| Co-operative Society (A.Y. 2022-23) | 0 to Rs.1 Crore | Nil |
| Above Rs.1 Crore | 12% | |
| Co-operative Society (A.Y. 2023-24) | 0 to Rs.1 Crore | Nil |
| Rs.1 Crore to Rs.10 Crore | 7% | |
| Above Rs.10 Crore | 12% | |
| Domestic Company | 0 to Rs.1 Crore | Nil |
| Rs.1 Crore to Rs.10 Crore | 7% | |
| Above Rs.10 Crore | 12% | |
| Foreign Company | 0 to Rs.1 Crore | Nil |
| Rs.1 Crore to Rs.10 Crore | 2% | |
| Above Rs.10 Crore | 5% |
From Assessment Year 2022-23 onwards:
- The maximum rate of surcharge on tax payable on dividend income or capital gain referred to in Section 112, shall be 15%.
- The surcharge rate for AOP with all members as a company shall be capped at 15%.
Income Range When Marginal Relief is Applicable
Income Range When Marginal Relief is Applicable: The following table shows which income brackets/ranges are eligible for marginal relief. The marginal relief is not applicable after this income range. Using the marginal relief calculator below, you can also check whether marginal relief is applicable to you.
| Assessee Status | Income Range for Marginal Relief Applicability |
|---|---|
| Resident Senior Citizen | Rs.50 Lakh to Rs.51.9552 Lakh Rs.100 Lakh to Rs.102.145 Lakh Rs.200 Lakh to Rs.209.296 Lakh Rs.500 Lakh to Rs.530.173 Lakh |
| Resident Super Senior Citizen | Rs.50 Lakh to Rs.51.9402 Lakh Rs.100 Lakh to Rs.102.1374 Lakh Rs.200 Lakh to Rs.209.28 Lakh Rs.500 Lakh to Rs.530.1528 Lakh |
| Any other Resident Individual, Any Non-Resident Individual, Any HUF or AOP/BOI | Rs.50 Lakh to Rs.51.9589 Lakh Rs.100 Lakh to Rs.102.1469 Lakh Rs.200 Lakh to Rs.209.30 Lakh Rs.500 Lakh to Rs.530.1782 Lakh |
| Firm | Rs.100 Lakh to Rs.105.4216 Lakh |
| Co-operative Society | Rs.100 Lakh to Rs.105.4162 Lakh |
| Domestic Company (Tax Rate 25%) | Rs.100 Lakh to Rs.102.389 Lakh Rs.1000 Lakh to Rs.1017.3611Lakh |
| Domestic Company (Tax Rate 30%) | Rs.100 Lakh to Rs.103.0927 Lakh Rs.1000 Lakh to Rs.1022.59030 Lakh |
| Foreign Company | Rs.100 Lakh to Rs.101.3513 Lakh Rs.1000 Lakh to Rs.1020.6896 Lakh |
Note: The above net income ranges will remain valid only if the assessee does not have any income which is chargeable to tax at the special rate of tax e.g., long-term capital gains, short-term capital gains under section 11A, lottery income etc.
Marginal Relief Calculation AY 2022-23 & AY 2023-24
This concept needs to understand as there are chances that an increase in the income tax is more than the increase in the income from prescribed limit as discussed above. To illustrate this let’s have an example where Surcharge on Income Tax is calculated:
The tax payer is assumed to be an individual with an income of 51 Lakh.
| Particulars | Amount |
| Total Net Income | 51,00,000 |
| Tax on total income (As per Income Tax Slab A.Y. 2023-24) | 13,42,500 |
| Surcharge @ 10% (Check Above Table for Surcharge Slab) | 1,34,250 |
| Total Tax Including Surcharge | 14,76,750 |
| Tax on 50 Lakh Excluding Surcharge | 13,12,500 |
| Additional Income Above 50 Lakh | 1,00,000 |
| Additional Tax on Additional Income means on (14,76,750 – 13,12,500) | 1,64,250 |
| Marginal Relief Will be Applicable (As additional Tax 1,64,250 is more than the additional income of Rs.1,00,000) | |
| Marginal Relief (Additional Income – Additional Tax) 1,64,250 -100000 | 64,250 |
| Now, Surcharge will be applicable as (Actual Surcharge – Marginal Relief) 1,34,250 – 64,250 | 70,000 |
| So Total Tax Liability (Note1) | 14,69,000 |
Note: 1
| Income Tax | 13,42,500 |
| Surcharge (After deducting Marginal Relief as mentioned above) | 70,000 |
| Education Cess | 56,500 |
| Total Tax | 14,69,000 |
You can check and learn from more examples of marginal relief. Use our marginal relief calculator. We have mentioned all steps on how to calculate marginal relief for a.y. 2023-24 & a.y.2022-23. You will definitely love it. If you want to download the marginal relief calculator in excel then please mentioned it in the comment form. We will update you here with the link to download the marginal relief calculator for ay 2023-24 in excel.
Marginal Relief Calculator (A.Y.2023-24/A.Y. 2022-23)
The average person finds it somewhat challenging to figure out how to calculate surcharges and marginal reliefs. By using our calculator and practising multiple examples, you can learn how to calculate surcharges and marginal reliefs on total net income.
Have questions? Feel free to use the comment section and place your queries there. We would be glad to help you learn about Surcharge and marginal relief calculation for a.y. 2023-24/2022-23.
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