Sol: First we need to remind Two provisions 1st is Surcharge on Above 1 crore -15% 2nd is Marginal Relief Provision Now start calculation;
STEP-01: Calculate Tax amount for first 10 Lakhs Upto 250000 = 0
250000 To 500000 = 12,500
500000 To 1000000 = 1,00,000 For First 10lakhs, tax is 1,12,500/-
STEP-02: Tax amount for Remaining balance (Rs. 91,20,000)
Above 10 Lakhs= Tax rate is 30% 91,20,000 X 30% = 27,36,000 Total Tax before surcharge = 1,12,500+27,36,000 => 28,48,500
STEP-3: Calculate Surcharge :
28,48,500 X 15%= 4,27,275
So, Tax payable before marginal Relief = 28,48,500+4,27,275 => 32,75,775
STEP-4: Calculate Marginal Relief;
Tax for 1,01,20,000 is 32,75,775
Tax for 1,00,00,000 is 28,12,500+2,81,250 (10% Surcharge on Above 50Lakhs to 1 Crore) => 30,93,750/-
Difference in Income = 1,01,20,000 (-) 1,00,00,000=> 1,20,000/-
Difference in Tax = 32,75,775 (-) 30,93,750 => 1,82,025/-
For increase of income 1,20,000, Tax payable is 1,82,025 How much fair it? So we can less marginal relief = 1,82,025 (-) 1,20,000 => 62,025/-
Tax Payable 32,75,775
(-) Marginal relief (62,025)
Net tax payable 32,13,750/-
Answer is 32,13,750/-
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