MAXIMUM MARGINAL RATE (MMR)

 Finance Act 2019 revised Surcharge rate for Individual, HUF, AOP/BOI. The rate is 10%, 15%, 25%, 37% depending on income and their sources. Further Finance Act 2020 provide optional new tax scheme for individual , HUF, AOP, BOI which provide new tax slab. This will also introduce confusion about now what is Maximum Marginal Rate. 


WHAT IS MMR

Maximum marginal rate is income tax rate including applicable surcharge and cess in relation to highest slab of income for Individual, AOP, BOI specified in Finance Act of relevant year.

USE OF MMR

  • Taxation of AOP/BOI
  • Taxation of Business trust being REIT & INVIT
  • Taxation of Investment Fund
  • Taxation on Accreted Income

MMR rate for FY 2019-20 & 2020-21

Highest tax slab for Both FY    :  30%
Highest applicable Surcharge    :  37%
Health & Education Cess          :   4%
So MMR will be                        : 42.744%

However, Finance Act(2) 2019 specified surcharge rate of 12% in case of Taxation of Accreted Income.[Sec 115TD]. Therefore MMR in such case 34.944% .







Location: India

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