Surcharge is levied on Earnings Tax and is levied if Earnings is greater than Rs. 50 Lakhs in case of People and Rs. 1 Crores in case of Corporations. Totally different charges of surcharge are relevant for various classes of taxpayers and the present charges of Surcharge are as follows:-
People, HUF, Affiliation of Individuals, Physique of People, Synthetic Judicial Individuals
| Degree of Earnings | Surcharge on Earnings Tax |
| Lower than Rs. 50 Lakhs | Nil |
| Rs. 50 Lakhs to Rs. 1 Crore | 10% |
| Rs. 1 Crore to Rs. 2 Crores | 15% |
| Rs. 2 Crores to Rs. 5 Crores | 25% |
| Greater than Rs. 5 Crores | 37% |
Associated Notable Factors
25% Surcharge and 37% Surcharge wouldn’t be relevant in following circumstances:-
-
- Dividend Earnings
- Earnings chargeable as Quick Time period Capital Good points on Sale of Shares/ Mutual Funds beneath Part 111A or Lengthy Time period Capital Good points on Sale of Shares/ Mutual Funds beneath Part 112A
Companies, Co-operative Societies and Native Authorities
| Degree of Earnings | Surcharge on Earnings Tax |
| Lower than Rs. 1 Crores | Nil |
| Greater than Rs. 1 Crores | 12% |
Home Firm
| Degree of Earnings | Surcharge on Earnings Tax |
| Lower than Rs. 1 Crores | Nil |
| Rs. 1 Crores to Rs. 10 Crores | 7% |
| Greater than Rs. 10 Crores | 12% |
Overseas Firm
| Degree of Earnings | Surcharge on Earnings Tax |
| Lower than Rs. 1 Crores | Nil |
| Rs. 1 Crores to Rs. 10 Crores | 2% |
| Greater than Rs. 10 Crores | 5% |
Word: The Price of Surcharge on Earnings Tax on Overseas Firm is much less as in comparison with Surcharge on People as Home Corporations and Overseas Corporations are already being charged a better fee of earnings tax as in comparison with People. The charges of Earnings Tax have been talked about on this hyperlink – Earnings Tax Charges in India
Method of Computation of Surcharge on Earnings Tax
After the computation of Earnings, the following step is to calculate the Earnings Tax can be levied as per the next schedule
| Class of Taxpayer | Earnings Tax Price |
| People & HUF | As per Earnings Tax Slab Charges |
| Companies and Native Authorities | Flat 30% |
| Home Firm – Turnover lower than Rs. 250 Crore | Flat 25% |
| Home Firm – Turnover greater than Rs. 250 Crore | Flat 30% |
| Overseas Firm | Flat 40% |
It’s pertinent to notice that Surcharge is levied on the overall earnings tax of the person and never on the earnings of the person. The factors for earnings above Rs. 50 Lakhs/ Rs. 1 Crore is barely to test whether or not the Surcharge can be levied or not. As soon as the earnings tax has been computed, surcharge can be levied on the earnings tax.
For the aim of computation of Earnings, the overall taxable earnings beneath all heads after deductions beneath Chapter VI-A and Part 80C can be taken under consideration. Some examples of deductions allowed beneath Chapter VI-A & Part 80C on the time of submitting of earnings tax returns are as follows:-
- PPF Account
- Tax Saving Fastened Deposit
- Tax Saving Mutual Funds
- Senior Citizen Financial savings Scheme
- Nationwide Financial savings Certificates
- Contribution to Nationwide Pension Scheme
- Contribution to Pension Funds
- Fee of Medical Insurance coverage Premium
- Fee for therapy of specified illness
- Donations
The above record is barely illustrative and there are numerous different deductions allowed beneath Chapter VI-A and Part 80C.
Examples of Levy of Surcharge on Earnings Tax
The next examples have been ready assuming the taxpayer is a Particular person and due to this fact Earnings Tax Slab Charges are relevant.
| Particulars | Taxpayer A | Taxpayer B |
| Complete Taxable Earnings | 47,00,000 | Rs. 53,00,000 |
| Complete Tax payable as per Earnings Tax Slabs | 12,22,500 | 14,02,500 |
| Applicability of Surcharge | No | Sure |
| Surcharge @ 10% | 1,40,250 | |
| Complete Tax payable (incl Surcharge) | 12,22,500 | 15,42,750 |
| Edu Cess @ 2% & SHEC @ 1% | 36,675 | 46,282.50 |
| Complete tax Payable (after Edu Cess & SHEC) | 12,59,175 | 15,89,033 |
Marginal Aid in case of levy of Surcharge on Earnings Tax
To clarify the idea of Marginal Aid we’re stating one other instance.
| Particulars | Quantity | Quantity |
| Complete Taxable Earnings | 50,00,000 | 51,00,000 |
| Complete Tax payable as per Earnings Tax Slabs | 13,12,500 | 13,42,500 |
| Applicability of Surcharge | No | Sure |
| Surcharge @ 10% | 1,34,250 | |
| Complete Tax payable (incl Surcharge) | 13,12,500 | 14,76,750 |
| Improve in Tax Legal responsibility (excl Cess) on account of Improve in Earnings | 1,64,250 |
Within the above instance, when the earnings is Rs. 50 Lakhs, Surcharge received’t be relevant. But when the earnings will increase by Rs. 1 Lakh to Rs 51 Lakhs, Surcharge on Earnings Tax can be relevant.
Though the Earnings has solely elevated by Rs 1 Lakh, the overall tax payable has elevated by 1,64,250 (i.e. 14,76,750- 13,12,500). As the rise in complete tax payable is greater than the precise enhance in earnings above Rs. 50 Lakhs, the idea of marginal reduction can be relevant on this case.