Surcharge is an additional charge or tax levied on the amount of income-tax calculated at the rates of income tax applicable for the financial year. It’s not calculated on income generated.
We have restricted our article to the rate of surcharge that is applicable to an individual in India.
For example if a tax is levied at 30% on an income of Rs 1,000, the total tax payable would be Rs. 300 (30% on Rs. 1,000). If the Government has decided to charge 2% surcharge when income exceeds Rs 1000, then 2% surcharge will be levied on Rs. 300.
In India, surcharge is levied only when total income is Rs. 50 lakhs or more. If your total income is below the limit of Rs. 50,00,000, then no surcharge is levied.
This means, surcharge is only levied on high-income individuals with total income of more than equal to Rs. 50,00,000.
Rate of surcharge increases from 10% to 37% based on total income.
Here is the table showing surcharge rates applicable to the financial year 2021-22 (Assessment Year 2022-23) and financial year 2022-23 (Assessment Year 2023-24).
| Total Income | Financial Year 2021-22 (Assessment Year 2022-23) | Financial year 2022-23(Assessment Year 2023-24) |
| Rs. 50 Lakhs to Rs. 1 Crore(including the income by way of dividend or income under provisions of section 111A and Section 112A of the Income tax act, 1961) | 10% | 10% |
| Rs. 1 Crore to Rs. 2 Crores(including the income by way of dividend or income under provisions of section 111A and Section 112A of the Income tax act, 1961) | 15% | 15% |
| Rs. 2 Crores to Rs. 5 Crores(excluding the income by way of dividend or income under provisions of section 111A and Section 112A of the Income tax act, 1961) | 25% | 25% |
| Exceeding Rs. 5 crores (excluding the income by way of dividend or income under provisions of section 111A and Section 112A of the Income tax act, 1961) | 37% | 37% |
| Exceeding Rs. 2 crores(including the income by way of dividend or income under provisions of section 111A and Section 112A of the Income tax act, 1961) | 15% | 15% |
Total income means the net income calculated after taking all possible tax deductions. Total income includes the income by way of dividend or income under the provisions of section 111A and section 112A of the Income tax act, 1961.
Please note, surcharge is also applicable to Hindu Undivided Family (HUF), AOP, BOI, Artificial Judicial Person, Domestic and Foreign Companies based on their net income.
Marginal relief on the surcharge levied is available for a certain class of taxpayers.
Marginal Relief on surcharge for financial year 2021-22 and 2022-23
Where the total income includes any income by way of dividend or income chargeable under section 111A and Section 112A of the Income tax act, 1961, the rate of surcharge on the amount of income tax computed in respect of that part of income shall not exceed 15%.
In case of persons mentioned above having total income exceeding,-
- 50 lakhs but not exceeding 1 Crore rupees, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax on a total income of 50 lakhs rupees by more than the amount of income that exceeds 50 lakhs.
- 1 crore but does not exceed 2 Crore rupees, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax and surcharge on a total income of 1 Crore by more than the amount of income that exceeds 1 Crore rupees.
- 2 crore but does not exceed 5 crore rupees, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax and surcharge on a total income of 2 Crore by more than the amount of income that exceeds 2 Crore rupees.
- 5 crore, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax and surcharge on a total income of 5 Crore by more than the amount of income that exceeds 5 Crore rupees.
