Surcharge is an additional tax levied on the income tax payable (not on income itself) when a taxpayer’s total income crosses specified thresholds. Think of it as a “tax on tax.”
Surcharge slabs for individuals (FY 2024-25)
| Total Income | Surcharge Rate |
| Up to ₹50 lakh | Nil |
| ₹50 lakh – ₹1 crore | 10% |
| ₹1 crore – ₹2 crore | 15% |
| ₹2 crore – ₹5 crore | 25%* |
| Above ₹5 crore | 37%* (old regime) / 25% (new regime) |
Under the new tax regime, surcharge is capped at 25% even above ₹5 crore.
Example 1:
Mr. Arjun — Total Income ₹45,00,000 No surcharge
Total taxable income₹45,00,000
Income tax (old regime, approx.)₹12,22,500
Surcharge (below ₹50L threshold)₹0
Health & Education Cess @ 4%₹48,900
Total tax payable₹12,71,400
Income is below ₹50 lakh — surcharge does not apply.
Example 2:
Ms. Priya — Total Income ₹80,00,000 10% surcharge
Total taxable income₹80,00,000
Income tax (old regime, approx.)₹24,37,500
Surcharge @ 10% on income tax₹2,43,750
Tax + Surcharge₹26,81,250
H&E Cess @ 4%₹1,07,250
Total tax payable₹27,88,500
Surcharge is 10% of the income tax amount — not of the income itself.
Example 3:
Mr. Rajan — Total Income ₹1.5 Crore 15% surcharge
Total taxable income₹1,50,00,000
Income tax (old regime, approx.)₹47,62,500
Surcharge @ 15% on income tax₹7,14,375
Tax + Surcharge₹54,76,875
H&E Cess @ 4%₹2,19,075
Total tax payable₹56,95,950
Marginal relief may apply if income slightly exceeds ₹1 crore.
Example 4:
Dr. Meena — Total Income ₹3 Crore 25% surcharge
Total taxable income₹3,00,00,000
Income tax (old regime, approx.)₹1,02,00,000
Surcharge @ 25% on income tax₹25,50,000
Tax + Surcharge₹1,27,50,000
H&E Cess @ 4%₹5,10,000
Total tax payable₹1,32,60,000
Under the new tax regime, the 37% slab is abolished — max surcharge is capped at 25%.
Note: Health & Education Cess of 4% is always applied on (income tax + surcharge). These figures are illustrative approximations.
Key points to remember
Surcharge is on tax, not income. If your income tax is ₹10 lakh and the surcharge rate is 10%, you pay ₹1 lakh as surcharge — not 10% of your income.
Marginal relief prevents a perverse situation where crossing a threshold by ₹1 causes a disproportionate jump in total tax. For instance, if your income is ₹50,00,001 (just above ₹50L), the extra tax you pay due to surcharge cannot exceed ₹1 (the amount by which income crossed the threshold).
New vs Old Regime difference. The biggest change under the new tax regime is that the 37% surcharge slab (for income above ₹5 crore) has been abolished — the cap is now 25%. This was a significant incentive for very high-income earners to switch regimes.
Who pays surcharge? It applies to individuals, HUFs, firms, companies, and other taxpayers — though the slab rates differ. For domestic companies, for example, it’s 7% above ₹1 crore income and 12% above ₹10 crore.
Where does it go? Surcharge is a central government levy and is not shared with states (unlike base income tax, a portion of which goes into the divisible pool). It essentially funds central schemes and expenditures.