Income Tax Surcharge in India

The Indian income tax system imposes a surcharge on income tax in addition to the basic tax rates. This surcharge is levied at different rates depending on the taxpayer’s total income.

Who is Liable to Pay Surcharge?

The surcharge applies to all categories of taxpayers in India, including:

• Individuals and Hindu Undivided Families (HUFs)
• Domestic Companies
• Foreign Companies
• Co-operative Societies

Surcharge Rates

The surcharge rates vary depending on the taxpayer’s income level and category. Here’s a breakdown of the rates for different categories:

1. Individuals and HUFs:

• 10% on income between ₹50 lakhs and ₹1 crore
• 15% on income between ₹1 crore and ₹2 crore
• 25% on income between ₹2 crores and ₹5 crores
• 37% on income exceeding ₹5 crores

2. Domestic Companies:

• 7% on income between ₹1 crore and ₹10 crore
• 12% on income exceeding ₹10 crore

3. Foreign Companies:

• 2% on income between ₹1 crore and ₹10 crore
• 5% on income exceeding ₹10 crore

4. Co-operative Societies:

• 7% on income between ₹1 crore and ₹10 crore
• 12% on income exceeding ₹10 crore

Marginal Relief

There is a marginal relief available from the surcharge in all cases. This means that the total amount of income tax and surcharge payable cannot exceed a certain limit. The limit is calculated as follows:

• For individuals and HUFs: 30% of the total income
• For domestic companies: 22% of the total income
• For foreign companies: 20% of the total income
• For co-operative societies: 22% of the total income

Additional Points to Note:

• The surcharge is calculated on the total taxable income after applying deductions and exemptions.
• The surcharge is not deductible from income for tax purposes.
• The surcharge rates and marginal relief provisions are subject to change by the government from time to time.

Additional resources:

Types of ITR | Which ITR Should I File?

How to File ITR?

What is Income Tax? | Tax Slab | Deductions Allowed

How to Save Tax in FY 2023-24?

New Income Tax Slab for FY 2023-24