What is surcharge and how it is computed?

Ans. Surcharge is an additional tax levied on the amount of income-tax. In case of individuals/HUF/AOP/BOI/artificial juridical person, surcharge is levied @ 10% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 50 lakh but doesn’t exceeds Rs. 1 crore.

Surcharge is levied @ 15% of income-tax where the total income of the taxpayer exceeds Rs. 1 crore but doesn't exceeds Rs. 2 crore.(*).

Surcharge is levied @ 25% of income-tax where the total income of the taxpayer exceeds Rs. 2 crore but doesn’t exceeds Rs. 5 crore(*).

Surcharge is levied @ 37% of income-tax where the total income of the taxpayer exceeds Rs. 5 crore(*).

Notes:

(a) The surcharge rate for AOP with all members as a company, shall be capped at 15%.

(b) The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112 112A and 115AD.

(c) The surcharge rate is nil if the total income of a ‘specified fund’ as referred to section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

(d) If assessee opted for tax regime under section 115BAC(1), the enhanced surcharge rate of 37% isn’t levied. In other words, f the total income of an assessee exceeds Rs. 5 crores, the surcharge rate will be 25% instead of 37%.

In case of Firm, and local authority surcharge is levied at 12% if total income exceeds Rs 1 crore. In case of co-operative society, surcharge is levied at 7% if total income exceeds Rs 1 crore but doesn’t exceeds Rs. 10 crore and surcharge is levied at 12% if total income exceeds Rs 1 crore. In case where a co-operative society opted for the alternative tax regime under section 115BAD or 115BAE, the surcharge is levied at a rate of 10% on total income of Rs. 1 crore or more. In case of a domestic company surcharge is levied @ 7% on the amount of income-tax if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 12% on the amount of income-tax if total income exceeds Rs. 10 crore (*). In case where a domestic company opted for alternative tax regime under section 115BAA or section 115BAB, the surcharge is levied at a rate of 10% on total income of Rs. 1 crore or more.

In case of a foreign company surcharge is levied @ 2% on the amount of income-tax if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 5% on the amount of income-tax if total income exceeds Rs. 10 crore (*).

(*) A taxpayer can claim marginal relief from the amount of surcharge, subject to certain conditions. Refer to next FAQ for concept of marginal relief.

Illustration for better understanding

Mr. Kapoor is a doctor, his total income for the year amounted to Rs. 44,00,000. Will he be liable to pay surcharge, if yes, then how much?

**

Surcharge is additional tax levied on the amount of income-tax. In case of individuals surcharge is levied @ 10​% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 50 lakh. In this case, total income of Mr. Kapoor is below Rs. 50 lakh, hence, he will not be liable to pay surcharge. ​​