Maximum marginal rate of tax is very complicated topic in Income Tax. This PPT will help you understanding well this topic in a easy and practical manner.

1. MAXIMUM MARGINAL RATE
OF TAX [MRT]
FORINDIVIDUALS

2. PRESENTATIONBYGROUP15
HARSHUL PATIDAR - 1923219
GAURAV - 1923273
SARANSH SINGH - 1923131
UDAY KUMAR - 1923245

3. TOPICS
1.INTRODUCTION
2.HIGHESTTAXRATESINOTHERCOUNTRIES
3.RECENTYEARCHANGESINMRT
4.SURCHARGE
5.HEC
6.NUMERICALEXAMPLE

4. As per Section 2(29C) of the Income Tax Act, 1961, the term “maximum marginal rate”
means the rate of income-tax (including surcharge on Income Tax, if any) applicable in
relation to the highest slab of income in the case of an individual, association of
persons or body of individuals as specified in the Finance Act of the relevant year.
ALSO KNOWN AS “SUPER RICH TAX” , “ROBIN HOOD TAX”
Source: Income tax India

5. ‘SUPER-RICH TAX’ / ‘MAXIMUM MARGINAL RATE OF TAX’
Source: TOi

6. Source : Deloitte india

7. SOURCE:DELOITTEINDIA
MRTINWORLD-COMPARISON
0
18
35
53
70
22
35
43
45
45
45
45
45
50
50
54
66
FRANCE CANADA USA BELGIUM CHINA UK S.AFRICA GERMANY SPAIN INDIA HONG KONG SINGAPORE

8. Source: KPMG
0
15
30
45
60
45
48
52
55
56
57
SWEDEN JAPAN AUSTRIA NETHERLANDS IRELAND AUSTRALIA

9. 2006-07 - 33.66%
2007-08 - 33.99%
2008-09 - 33.99%
2009-10 - 33.99%
2010-11 - 33.99%
2011-12 32.44%
2012-13 - 32.45%
2013-14 - 33.99%
2014-15 - 33.99%
2015-16 - 34.61%
2016-17 - 35.00%
2017-18 - 35.54%
2018-19- 37.00%
2019-20 - 42.744%
Changes in Marginal Rate of Tax in INDIA
(AY)
Source : hdfc india,paisabazaar

10. 0
11
22
33
44
FLUCTUATIONS IN MRT FROM AY 2006-07 TO 2019-20
I N D I A
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Source : investopedia

11. Why Maximum Marginal Rate of Tax?
The maximum marginal tax rate that an individual taxpayer has to
pay in India is 42.74 per cent.
This includes a basic tax rate of 30 per cent plus Surcharge of 37
per cent plus Health and education cess of 4 per cent.
What is Surcharge?
“Surcharge is an additional charge or Tax”
Surcharge is a tax on tax. It is levied on the tax payable, and not on the income
generated.
It is an added tax on the taxpayers having a higher income inflow during a particular
financial year. Our government ensures that with the surcharge provision, the rich
contribute to the income taxes more than the poor.

12. SURCHARGE
Person Net Income Range Surcharge (%)
Individuals/HUF/AOP/BOI/
Artificial Juridical Person
0 - Rs. 50 lakh
Rs. 50 lakh - Rs. 1 crore
Rs. 1 crore - Rs. 2 crore
Rs. 2 crore - Rs. 5 crore
Above Rs. 5 crore
Nil
10%
15%
25%
37%
Firm/Co-operative society/local
authority
0 - Rs. 1 crore
Above Rs. 1 crore
Nil
12%
Domestic Company
0 - Rs. 1 crore
Rs. 1 crore - Rs. 10 crore
Above Rs. 10 crore
Nil
7%
12%
Foreign company
0 - Rs. 1 crore
Rs. 1 crore - Rs. 10 crore
Above Rs. 10 crore
Nil
2%
5%
Source : taxmann

13. HEALTH AND EDUCATION CESS
A cess is a form of tax levied or collected by the government for the development or
welfare of a particular service or sector.
Health and Education cess(HEC) is collected with the aim of addressing the educational
and healthcare needs of rural families in India.
Cess collected for a particular purpose cannot be used for or diverted to other purposes.
At present, the government charges a 4% health and education cess on the direct income
tax liability of individuals. This cess was introduced in Union Budget 2018 by then finance
minister Arun Jaitley, who replaced the earlier secondary and higher education cess of 3%.
In order to fund the education and health proposals announced in Budget 2018 as above,
cess was increased by another 1%.
Accordingly, ‘Secondary and Higher Education cess’ was discontinued and ‘Health and
Education Cess’ at 4% on tax (including surcharge) was introduced. Finance minister
estimated an additional collection of Rs 11,000 crores with an increase of cess by 1%.

14. CALCULATIONOFMAXIMUMMARGINALRATEOFTAX
Income Slabs Tax Rate Computation Tax (Rs.)
0 - 2,50,000 0% 2,50,000×0 % Nil
2,50,001 - 5,00,000 5% (5,00,000-2,50,000)×5 % 12,500
5,00,001 - 10,00,000 20% (10,00,000- 5,00,000)
×20 %
1,00,000
10,00,001 & above 30% (6,00,00,000-10,00,000)
×30 %
1,77,00,000
Basic tax 1,78,12,500
Example 2 – For the AY 2020-21, Net taxable income of Mr. X age (53 years), Normal resident of India is Rs.
6,00,00,000/-
Solution:- Calculation of tax liability and Maximum marginal rate of tax of Mr. X for the AY 2020-21,
Net Taxable income = Rs 6,00,00,000 /-

15. Solution:-
Calculation of tax liability and Maximum marginal rate of tax of Mr. X for the AY 2020-21,
Net Taxable income = Rs 6,00,00,000
Basic tax = 1,78,12,500
Add: Surcharge @37% on 1,78,12,500 = 65,90,625
Basic tax + Surcharge = 2,44,03,125
Add: Health&education cess @4 % on 2,44,03,125 = 9,76,125
Tax liability = Rs. 2,53,79,250/-
Highest rate (Rate of tax on the highest -> 30 % = 30.00
slab of Income)
Add: Surcharge @37 % on highest rate -> 37 % = 11.10
= 41.10
Add: Health&education cess @4 % -> 4% = 1.64
= 42.74
Maximum Marginal rate of tax = 42.74 %

16. CONCLUSION
The main objective of marginal tax rates is to tax individuals on the basis of what they earn,
where people with lower income are taxed at lower rates as compared to people with higher
income.
Surcharge is an additional charge or tax. It is levied on the tax payable, and not on the
income generated. It is an added tax on the taxpayers having a higher income inflow during
a particular financial year.
Our government ensures that with the surcharge provision, the rich contribute to the income
taxes more than the poor by paying Maximum marginal rate of tax.