Marginal Relief for small taxpayers.

[kushal mukhoti]

'The finance ministry has offered a marginal relief under the new tax regime to small Income taxpayers, whose Income exceeds Rs 7 lakh, to correct a mathematical anomaly. This will be available from April 1 for the financial year 2023-24.' 

Though the details of the calculations are not available right now, I have tried to calculate the same taking into account that the rebate u/s 87A will remain in force even if the taxable income crosses the limit of Rs 700000/-.up to the break-even limit to avail of the marginal relief. 

I am attaching the calculator to help you plan your tax in advance. 

[Krishnaiah Bondalapati]

In the new regime, only a standard deduction of Rs50000/- is deductible and all other deductions under sections 80C, D, G, etc are not taken into consideration. Those who do not have any savings can avail new regime.

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[kushal mukhoti]

Please go through the news report of 25th March 2023 published in the Times of India. If your taxable income after deducting 50000/- as Standard Deduction comes to 701000/-, you need to pay a  basic tax of Rs 25100/-( plus education cess) as you will not get the rebate of RS 25000/-  as the taxable income has crossed 700000/- . But after introduction of this new relief you will have to pay only 90% of the extra amount of 1000/- (701000 - 700000= 1000 *90%= 900/- only). So, the marginal relief will be 25100 - 900 = 24200/-. I have prepared this calculator assuming that the formula used to calculate the marginal relief to calculate surcharge will be adopted. 

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[Ashok Shrikhande]

DearSir

Please read attached cutting from Value research

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[Ashok Shrikhande]

This is the link

https://www.valueresearchonline.com/stories/52372/small-tax-payers-have-a-reason-to-celebrate/

[kushal mukhoti]

Mr Ashok Shrikhande,

Thank you very much for providing me with the chart published by Value Research. In my calculator, I followed the logic of the existing formula adopted by the CBDT while calculating Marginal Relief on surcharges when the Taxable income exceeds the threshold limit of fifty lakhs. 'Value Research' has followed a different formula ostensibly getting inputs from the CBDT, However, I am attaching the excel file again adding a new calculator following the formula adopted by Value Research. 

Regards.

Kishalaya Mukherjee. 

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[S L GULATI-ADV:-]

Sir,

By reckoning the I-Tax on Rs. 705000/- to say Rs.5000/- will be the tax. This proposition is misleading. If after deduction of Standard deduction, the income from salary is more than Rs. 700000/-,  then whole amount is taxable at prescribed normal rates. By stretching the proposition given by one of the friends, it means exemption limit is Rs. 7 lac. This is not so. Limit has been enhanced from 5 lac to 7 lac us 87A of the I-T Act. Please be guided accordingly  and avoid any confusion. 

S L Gulati  EX  PNB  SVRS

Advocate & Tax Consultant 

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[Ashok Shrikhande]

Respected Kishalaya Mukherjee

Thank you very much for the excel sheet prepared by you.

Regards

Ashok Shrikhande

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[kushal mukhoti]

Mr Ashok Shrikhande,

Thank you very much for providing me with the chart published by Value Research. In my calculator, I followed the logic of the existing formula adopted by the CBDT while calculating Marginal Relief on surcharges when the Taxable income exceeds the threshold limit of fifty lakhs. 'Value Research' has followed a different formula ostensibly getting inputs from the CBDT, However, I am attaching the excel file again adding a new calculator following the formula adopted by Value Research. 

Regards.

Kishalaya Mukherjee. 

To view this discussion on the web visit https://groups.google.com/d/msgid/bankpensioner/CAB5i73Rda84UPD-Rf0zXhK3Gr%2BcGSRm7ke1GhtGmrpFE_HQ4ag%40mail.gmail.com.

[Ashok Shrikhande]

Dear Gulati sir

The exemption under sec 87A is for assesses opting for the old tax regime. Under new tax regime, no tax upto Rs 7.00 lacs after accounting for standard deduction. You please check from the excel sheet provided by respected Kishalaya Mukherje, you can see there less tax upto the taxable amount of Rs 7,77,778.00

Regards

Ashok Shrikhande

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[kushal mukhoti]

Mr Gulati,

There is no confusion about the fact that if the taxable limit exceeds even by a rupee (after allowing the standard deduction of 50000/-) the whole amount will be taxable and section 87A will not be applied. As a result, if the taxable income exceeds even by one rupee from Rs. 700000/-, one will end up paying Rs.25000 +.  To give relief to the small taxpayers, CBDT has come up with this formula and announced that the basic tax will not be more than the difference between the taxable income and Rs.700000/-. This is in line with the existing Marginal Relief is being allowed while calculating surcharges payable for taxable income exceeding Rs.50 lakhs. But in the absence of any clear-cut instructions from the CBDT it is not still clear whether the marginal relief will be 100% of the difference as reported by Value Research or 90% of the difference similar to Marginal Relief on taxable income above 50,00,000/- that allows a relief of 70% of the difference, up to the break-even point. 

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[S L GULATI-ADV:-]

Sorry, plesse do not flash such incorrect information on the blog much less to me.

Your understanding  is not correct. 87A is applicable in both the regime.

 S L Gulati

ADVOCATE

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[MOHANDAS RAO]

Friends,

Sri S L Gualati Sir is not only a retired banker, but also a learned tax practitioner, still practising. He is very knowledgeable. Recently the Canara Bank has also issued a detailed circular about the TDS for the working staff, as well as for the retirees. It is prepared by an expert team of the bank. It is attached. Please go through it.

K. MOHANDAS RAO

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[MOHANDAS RAO]

Friends,

Regarding Section 87A, please look at the attachment [from a Canara Bank Circular].

K. MOHANDAS RAO

[kushal mukhoti]

'By reckoning the I-Tax on Rs. 705000/- to say Rs.5000/- will be the tax. This proposition is misleading.' 

That means that the leading newspapers are misleading the public by publishing false news. 

' If after deduction of Standard deduction, the income from salary is more than Rs. 700000/-,  then whole amount is taxable at prescribed normal rates.' 

Yes. But that's not the end  A taxpayer is entitled to a marginal relief if the taxable amount crosses the threshold limit of 7,00,000/- by a small margin.  In no circumstances, the basic tax should exceed the amount by which the taxable income has exceeded 7,00,000/-. 

 

'By stretching the proposition given by one of the friends, it means exemption limit is Rs. 7 lac. This is not so.' 

No. That's so. 

 

'Limit has been enhanced from 5 lac to 7 lac us 87A of the I-T Act'. No. The limit has been enhanced from 12500/_ to 25,000/- u/s 87A of the IT Act. 

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[JSOMA SHEKARA]

To cross the limit of Rs.700,000 a pensioner should get Pension of Rs.60000 PM.  In the Banking Industry only 1% of pensioners may be getting a pension more than 60000PM.  Most of the pensioners are getting annual pension income of less than 500000.

Only those pensioners who have income from investments and income from other sources need worry about these tax rules.

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