What is surcharge in Indian income tax?

Surcharge is an additional tax levied on the amount of income tax payable, rather than on the income itself, for individuals whose total income exceeds specified thresholds (Rs 50 lakh, Rs 1 crore, Rs 2 crore, and Rs 5 crore).

What are the surcharge rates under the new tax regime?

Under the new tax regime, the surcharge rates are 10% for income between Rs 50 lakh and Rs 1 crore, 15% for income between Rs 1 crore and Rs 2 crore, and 25% for income exceeding Rs 2 crore. The 37% rate does not apply to the new regime.

What are the surcharge rates under the old tax regime?

Under the old tax regime, the surcharge rates are 10% for income between Rs 50 lakh and Rs 1 crore, 15% for income between Rs 1 crore and Rs 2 crore, 25% for income between Rs 2 crore and Rs 5 crore, and 37% for income exceeding Rs 5 crore.

What is the maximum surcharge cap on dividends and capital gains?

Surcharge on tax payable on dividend income and capital gains (under Section 111A, 112, and 112A) is capped at a maximum of 15% to prevent excessive taxation on investment income.

How is marginal relief calculated for surcharge?

Marginal relief ensures that the increase in total tax payable (including surcharge) does not exceed the increase in income beyond the threshold. For example, if income is Rs 50.1 lakh, the surcharge cannot exceed the income exceeding Rs 50 lakh (Rs 10,000) minus the tax difference.

Does surcharge apply to firms and companies in India?

Yes, surcharge applies to partnership firms, LLPs, and corporate entities, but at different flat rates and thresholds. For partnership firms and LLPs, a flat 12% surcharge applies if income exceeds Rs 1 crore.

Is surcharge calculated on taxable income or tax amount?

Surcharge is calculated as a percentage of the calculated income tax before cess, not on the taxable income directly. For example, if tax is Rs 10 lakh and surcharge is 10%, the surcharge amount is Rs 1 lakh.

What is health and education cess and is it charged on surcharge?

Health and education cess is a 4% levy charged on the sum of basic income tax plus surcharge. It is calculated after applying surcharge and marginal relief.

How does surcharge affect high net worth individuals (HNIs)?

Surcharge substantially increases the effective tax rate for high net worth individuals (HNIs). In the old regime, the maximum surcharge of 37% drives the peak tax rate to 42.744%, while the new regime caps surcharge at 25%, making the peak tax rate 39%.

What is the surcharge rate for an income of Rs 1.5 crore?

For an income of Rs 1.5 crore, the surcharge rate is 15% on the basic income tax payable, under both the new and old tax regimes.

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Income Tax Surcharge Calculator: FY 2026-27 | Fermor

Income Tax Surcharge Calculator: FY 2026-27 | Fermor | Fermor