In the past, creating private trust for tax saving was so rampant , that government was forced to bring in amendments and provision under Income Tax to plug the tax saving route. This was done primarily for trusts which carry out business. They are made to pay highest of tax rate , called maximum marginal rate of tax. Readers must have read Private Trust :7 Tax Planning Tips You Can Actually Use
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What is Maximum Marginal Rate of Tax ?
Definition section 2 of the I.T.Act , under sub-section 9C defines maximum marginal rate to mean as under
(9C)Â “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 individualÂ , association of persons or, as the case may be, body of individuals] as specified in the Finance Act of the relevant year ;