Surcharge income tax

Surcharge income tax

In India, the concept of surcharge for the taxpayers on the basis of categorization was introduced by Finance Act 2013. Surcharge is levied on the income tax and not on the income itself. In other words, it is a tax on tax. The surcharge rate had been increased in the Finance Act 2017 and there has been no change in the surcharge rate since then.

Surcharge categories

Individuals: If the income during the relevant Assessment year is Rs 1 crore or more, the surcharge is leviable at the rate of 15 percent. However if the taxable income is more than Rs 50 lakhs and less than Rs 1 crore, surcharge of 10 percent would be applicable.

Firms, Co-operative societies and local authorities: If the income during the relevant Assessment year is Rs 1 crore or more, the surcharge is leviable at the rate of 12 percent. However, no surcharge is applicable if the income is less than Rs 1 crore.

Domestic Company: If the income during the relevant Assessment year is Rs 10 crores or more, the surcharge is leviable at the rate of 12 percent. However if the taxable income is more than Rs 1 crore and less than 10 crore, surcharge of 7 percent would be applicable. No surcharge is applicable for income less than Rs 1 crore.

Foreign company: If the income during the relevant Assessment year is Rs 10 crores or more, the surcharge is leviable at the rate of 5 percent. However if the taxable income is more than Rs 1 crore and less than Rs 10 crore, surcharge of 2 percent would be applicable. No surcharge is applicable for income less than Rs 1 crore.

The rates of surcharge applicable on foreign companies and domestic companies are less than the surcharge applicable to individuals as the companies are already taxed at a higher rate than the individuals as per the income tax slabs.

Know about Marginal relief.

Know about the Individual's tax slabs