New to site? Create an Account


Lost password? (close)

Already have an account? Login



Surcharge on Income Tax


March 23, 2023


5 mins read

Surcharge on income tax

Income tax is one of the primary revenue sources of the Indian Government. The Indian Government imposes a surcharge on taxpayers who earn income above a certain threshold to charge a higher rate of tax from high-income earners. Consequently, it is generally calculated as a percentage of the income tax payable by the taxpayer.

Who are liable to pay a surcharge?

Specifically, surcharge is applicable to the following categories of taxpayers: –

  • Individuals;
  • Hindu Undivided Families (HUFs);
  • Firms (including Limited Liability partnerships); and
  • Companies;

The taxpayer’s net tax payable serves as the basis for calculating the surcharge.

Rates of Surcharge on Income Tax: –

The rate of surcharge varies on the basis of the income of the taxpayer. They are as under:-

Type of Taxpayer Income Limit Applicable Surcharge Rate on Income tax


Individual/HUF/AOP/BOI/Artificial Judicial Person Less than Rs 50 Lakhs Nil
Individual/HUF/AOP/BOI/Artificial Judicial Person Rs.50 Lakhs to Rs. 1 Cr. 10%


Individual/HUF/AOP/BOI/Artificial Judicial Person Rs.1 Cr. to Rs 2 crs. 15%
Individual/HUF/AOP/BOI/Artificial Judicial Person Rs.2 Crs to Rs 5 crs. 25%
Individual/HUF/AOP/BOI/Artificial Judicial Person More than Rs.5 Crs. 37%*
Firm/LLP/Local authorities/Co-operative Society More than Rs.1 Cr. 12%
Domestic Company Rs.1 Cr to Rs.10 Crs. 7%
Domestic Company More than Rs.10 Crs. 12%
Foreign Company Rs.1 Cr to Rs.10 Crs 2%
Foreign Company More than Rs.10 Crs 5%

*Whereas the proposed rate of surcharge on income tax under the new regime ranges from 10% to 25% which is applicable from FY 2023-24.

Different perspectives by different sectors on a surcharge on income tax: –

The application of surcharge helps the Government to reduce income inequality in the country. The Government can use the funds for Various social welfare programs and infrastructure projects.

However, some people argue that the application of the surcharge is biased, as it targets only high-income earners. Moreover, it can also inspire tax evasion, as taxpayers may seek to hide their income to avoid paying the surcharge. Additionally, it can also lead to tax evasion, as taxpayers may seek to move their income to other jurisdictions with lower tax rates.

Conclusion: –

To ensure that high-income earners pay their fair share of taxes, Governments levy surcharges as an additional tax. However, although subject to analysis, it is a necessary tool for encouraging income equality and distributing the tax burden fairly. The surcharge is likely to remain an important source of revenue for years to come as Governments continue to grapple with budget deficits and other fiscal challenges.


Related Blogs:

Section 115BA of Income Tax, 1961

Income Tax E-Filing

Presumptive Income- Section 44ADA Income Tax Act

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.


Section 194M of Income Tax Act

Section 194M of Income Tax Act - TDS from Payment

Tax Deduction at Source (TDS) | TDS Rate FY 2022-23 | Dates

Chapter XVII-B of the Income Tax Act, 1961, (hereinafter referred

Deductions under UAE Corporate Tax Law

Introduction - Deductions under UAE Corporate Tax Law A Taxable

Cabinet Resolution on Tax Residency in the UAE

Introduction The UAE Government recently issued a Cabinet Resolution detailing

Leave a Reply

Your email address will not be published. Required fields are marked *

Have query and need a consultation with
tax expert?

Arinjay Jain

M&A | International Tax | Direct Tax

We provide consultation to resolve your queries in the Area of International Tax, Merger, Demerger and Foreign Investment, though call with our Tax Expert Mr. Arinjay Jain for a 15 minutes session.

Learn More t
  • Live Classes - July 2023 Batch
  • Recorded Lectures
  • 1 Year updates 
*On Order over $100