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Did you know that earning more than ₹50 lakh in India can actually REDUCE your take-home income? 🤯
Yes, you could earn ₹1 lakh more and still end up with less money after paying income tax.
Here's how 👇🧵
There's a rule called marginal relief.
It protects you from a sudden tax jump when your income crosses ₹50 lakh.
For example, when Priya earns ₹1 lakh extra:
💰 Extra income = ₹1,00,000
💸 Extra income tax + surcharge = ₹1,00,000
➕ 4% cess on the extra tax = ₹4,000
Total additional tax = ₹1,04,000
That's why Priya ends up with ₹4,000 less despite earning ₹1 lakh more.
So does this mean you should avoid earning more than ₹50 lakh?
No.
This happens only within a limited income range above ₹50 lakh.
As your income increases further, your take-home amount starts rising again.
But here's the surprising part:
A higher income doesn't always mean more money in your pocket.
And that's why understanding surcharge and marginal relief matters.
Earning ₹40 lakh salary, here is how much Income Tax you might need to pay👇
ALT TAx Calculation on 40 Lakh Salary
Invest in US stocks?
One missed disclosure in your ITR could lead to questions from the tax department. 🚨
Here’s what you should know 👇🧵
To claim foreign tax credit, report the foreign income and tax paid in the relevant ITR schedules.
You may also need:
📄 Tax residency Certificate
📄 Form 67
The credit is subject to the applicable rules and supporting proof.
And if you are a resident and Ordinarily Resident, your US shares may need to be reported on Schedule FA and Schedule FSI.
Even if you did not sell them.
So remember:
Tax on gains, tax on dividends and disclosure of the shares are three separate requirements.
Getting one right does not automatically cover the others.
1/ Planning to sell your IPO shares on listing day?
You may have to pay 20% tax on the profit you make.
Here's how your IPO gains are taxed 👇🧵
5/ The first ₹1.25 lakh of eligible long-term capital gains in a financial year is exempt from tax.
For example, if your total eligible long-term gains are ₹2 lakh:
Total gains = ₹2,00,000
Less: Annual exemption = ₹1,25,000
Taxable gains = ₹75,000
Tax at 12.5% = ₹9,375, before cess and surcharge.
Remember, this ₹1.25 lakh limit applies to your combined eligible gains for the year, not separately to each IPO.
6/ So, before selling your IPO shares, remember:
📌 Your IPO issue price is generally your purchase cost.
📌 The holding period starts from the allotment date.
📌 The sale date is the trade date, not the settlement date.
📌 Sold within 12 months? Short-term gains are generally taxed at 20%.
📌 Held for more than 12 months? Eligible long-term gains above ₹1.25 lakh are taxed at 12.5%.
So, don't just look at your listing gains. Check how much tax you may have to pay before selling.
Tax rates assume qualifying listed equity transactions subject to applicable STT conditions. Cess and surcharge may apply.