Marginal relief from surcharge applies when:
AIncrease in income beyond threshold causes additional tax higher than additional income
BIncome exceeds Rs. 1 crore
CTotal income below Rs. 50 lakhs
DCapital gains exceed Rs. 1 crore (per relevant Section) (per relevant Section)
Answer & Solution
Correct answer: A. Increase in income beyond threshold causes additional tax higher than additional income
1. Marginal relief ensures additional tax (due to surcharge step-up) does not exceed the additional income earned beyond the surcharge threshold.
2. Example: income crosses Rs. 50L by Rs. 10,000 — additional tax should not exceed Rs. 10,000.
3. Marginal relief computed at each surcharge slab transition.
_Source: ICAI BoS CA Final Paper 7, Ch 1 "Basic Concepts"_
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