Surcharge on Income Tax

Individuals/HUF/Artificial Judicial Person/Association of Persons/Body of Individuals

The table below provides details on tax rates for various income tax slabs for Assessment Year 2025-26:

1. Individuals, Partnership Firms, HUF, LLPs: If the income during a specific assessment year is Rs.1 crore or more, the
2. Domestic companies (income more than Rs.1 crore but less than Rs.10 crores): surcharge on income tax is 7 percent.
3. Domestic companies (income more than Rs.10 crores): surcharge on income tax is 12 percent.
4. Foreign companies (income more than Rs.1 crore but less than Rs.10 crores): 2 percent on income tax is billed as surcharge.
5. Foreign companies (income more than Rs.10 crores): 5 percent of income tax is billed as surcharge.

Surcharge Rates for Local Authority/ LLP/ Firm

In case the total income is more than Rs.1 crore, 12% of the income tax amount is the surcharge that is levied.

Surcharge Rates for Foreign Companies

Surcharge Rates for Domestic Companies

The surcharge rates applicable vary, depending on the various factors such as the holding of the company/individual. Please note the surcharge levied is applicable on the income tax and not the income itself. To compute income tax liability, deduction under various heads would be taken into account before arriving at a figure on the basis of rate slabs.

Concept of Marginal Relief on levy of Surcharge

This provision comes into picture when the increase in income tax liability is more than the actual increase in income. For example, let's take a scenario where a salaried individual who has declared an income of Rs.1 crore 1 lac, which has put him under the surcharge bracket as per the tax slabs. Due to change in slabs, his income tax liability will be more than the the increase in the income itself, a marginal relief on the surcharge payable kicks in.

Marginal Relief

In some cases, surcharge might need to be paid in case the individual’s income is slightly more than the limit. For such cases, marginal relief has been introduced. The main aim of marginal relief is to ensure that the surcharge that is levied is not more than the amount more than threshold.

Calculation of Marginal Relief

Individuals/HUF/Artificial Judicial Person/Association of Persons/Body of Individuals

Marginal relief is applicable if the individual’s income is above Rs.50 lakh.

Example:

1. Total Income: Rs.50.10 lakh

1. Surcharge: 10%

1. Tax on Income (apart from Surcharge): Rs.11,88,000

1. Tax to be Paid (including Surcharge): Rs.13,06,800

Since the income of the individual is Rs.10,000 more than the threshold limit, the tax that must be paid has increased by Rs.1,21,800.

However, since the introduction of marginal relief, the calculation that is followed is mentioned below:

1. Total Income: Rs.50.10 lakh

1. Tax on Income (apart from Surcharge): Rs.11,88,000

1. Surcharge after considering Marginal Relief: Rs.7,000

1. Tax to be Paid: Rs.11,95,000

Companies

In case the total income of domestic companies is above Rs.1 crore and up to Rs.10 crore, 7% is the surcharge rate. For foreign companies, the surcharge rate is 2%. However, marginal relief is provided on the income that is higher is not more than the tax that must be paid on Rs.1 crore does not exceed Rs.1 crore. 

LLP Authorities/ LLP/ Firms

In case the income is above Rs.1 crore, the surcharge rate is 12% on the tax amount that must be paid. However, marginal relief is provided on the income that is higher is not more than the tax that must be paid on Rs.1 crore does not exceed Rs.1 crore.