Surcharge on Income Tax India

Updated: 3 June 2026

Surcharge is an additional levy on income tax (not on income) applicable when total income exceeds ₹50 lakh. For individuals, rates range from 10% to 25% (new regime) or 37% (old regime above ₹5Cr). A 4% Health & Education Cess applies on tax + surcharge.

25%

Maximum surcharge under the new tax regime for FY 2025-26 — capped at 25% even for income above ₹5 crore (vs 37% in old regime).

What is Income Tax Surcharge?

Surcharge is an extra tax charged on top of your income tax, not on your income itself. It is collected when a taxpayer's total income crosses specified thresholds set by the government. The purpose is to ensure progressivity at very high income levels. The final tax outgo is: Income Tax + Surcharge + 4% H&E Cess on (Tax + Surcharge).

Surcharge is distinct from cess. While cess goes toward education and health fund pools, surcharge goes to the Consolidated Fund of India. Both are mandatory and cannot be avoided by any deduction or exemption.

Surcharge Rates for Individuals — FY 2025-26

Total Income Slab	New Tax Regime	Old Tax Regime
Up to ₹50 Lakh	Nil	Nil
₹50 Lakh – ₹1 Crore	10%	10%
₹1 Crore – ₹2 Crore	15%	15%
₹2 Crore – ₹5 Crore	25%	25%
Above ₹5 Crore	25% (capped)	37%

Note: LTCG (Sec 112A) and STCG (Sec 111A) from equity — maximum surcharge 15% regardless of total income.

Effective Tax Rates Including Surcharge and Cess

Total Income	Surcharge Rate (New)	Effective Rate (New Regime)	Effective Rate (Old Regime)
₹50 Lakh	Nil	~26.0%	~29.9%
₹1 Crore	10%	~28.5%	~33.0%
₹2 Crore	15%	~30.9%	~35.9%
₹5 Crore	25%	~35.9%	~39.0%
₹10 Crore	25% (capped)	~35.9%	~42.7%

Effective rates are approximate; computed on rounded income with standard slab calculations. Actual amounts depend on deductions claimed.

Surcharge on Companies

Domestic companies also pay surcharge on their corporate income tax: 7% surcharge if net income is between ₹1 crore and ₹10 crore; 12% surcharge if net income exceeds ₹10 crore. The base corporate tax rate is 22% (under Section 115BAA) for most domestic companies, making effective rates approximately 25.17% (with cess) at the standard level.

Marginal Relief — Explained with Example

Marginal relief prevents a situation where crossing a surcharge threshold by a small amount results in a disproportionately large increase in tax.

Example: Mr. A has total income of ₹51,00,000 (₹1 lakh above the ₹50L threshold).

Tax on ₹50L (no surcharge) = approx ₹13,12,500 (old regime)
Incremental income above threshold = ₹1,00,000
Maximum permissible tax increase = ₹13,12,500 + ₹1,00,000 = ₹14,12,500
If 10% surcharge on tax at ₹51L exceeds ₹14,12,500, surcharge is reduced to bring it to exactly ₹14,12,500

Marginal relief is available at each surcharge threshold (₹50L, ₹1Cr, ₹2Cr, ₹5Cr). It must be computed and claimed manually — the ITR utility computes it automatically.

Surcharge on Special Income (LTCG / STCG)

For capital gains taxed under special provisions — Section 112A (LTCG from equity shares and equity-oriented mutual funds above ₹1.25 lakh) and Section 111A (STCG from equity at 20%) — the maximum surcharge is capped at 15%, irrespective of total income. This is a statutory cap that benefits high-income equity investors.

Frequently Asked Questions

What is surcharge on income tax in India?

Surcharge is an additional tax levied on the income tax amount itself — not on income directly. It applies when total income exceeds certain threshold limits (₹50 lakh for individuals). For example, if your income tax is ₹5 lakh and the surcharge rate is 10%, you pay ₹50,000 extra as surcharge. On top of this, a 4% Health & Education Cess is levied on (income tax + surcharge). Surcharge is collected by the Central Government and is meant to ensure higher earners contribute proportionately more.

At what income level does 10% surcharge apply for individuals?

For individual taxpayers, a 10% surcharge applies when total income exceeds ₹50 lakh but does not exceed ₹1 crore. This applies under both the old and new tax regimes for FY 2025-26. For example, if your total income is ₹75 lakh, your computed income tax is increased by 10% as surcharge. Note that marginal relief is available near the ₹50L threshold to prevent situations where the tax plus surcharge exceeds the income earned above the threshold.

Is marginal relief available from income tax surcharge?

Yes. Marginal relief ensures that the additional tax burden due to surcharge does not exceed the additional income that crossed the threshold. For example, if your income is ₹51 lakh (₹1L above the ₹50L threshold), the surcharge cannot result in tax exceeding the tax payable on ₹50L plus the entire ₹1L incremental income. The formula: if (tax + surcharge) on ₹51L > (tax on ₹50L) + ₹1,00,000, the surcharge is reduced so that (tax + surcharge) = (tax on ₹50L) + ₹1,00,000. This prevents cliff-edge tax jumps.

What is the maximum surcharge rate in the new tax regime?

Under the new tax regime, the maximum surcharge for individual taxpayers is capped at 25% — even for incomes above ₹5 crore. This cap was introduced from FY 2023-24 as a key benefit of the new regime. In contrast, the old regime allows a 37% surcharge for incomes above ₹5 crore. The 25% new-regime cap significantly reduces the effective tax rate for very high-income earners (₹5Cr+), making the new regime more attractive at ultra-high income levels.

What is the surcharge rate on LTCG and STCG from equity?

For Long-Term Capital Gains covered under Section 112A (listed equity, equity mutual funds) and Short-Term Capital Gains under Section 111A, the maximum applicable surcharge is 15% — regardless of the taxpayer's total income. So even if your total income is ₹10 crore, the surcharge on the LTCG/STCG portion from equity will only be 15%, not 25% or 37%. This is a significant relief for equity investors. The 4% H&E Cess applies as usual on (tax + 15% surcharge) for these gains.

Surcharge On Income Tax Near You

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