Surcharge for Assessment Year 2019-2020

In simple terms, surcharge means an additional charge or an additional tax. Under the income tax, surcharge becomes applicable in case the taxable income of the assessee exceeds the specified limit.

The basic motto behind the levy of the surcharge, under the income tax, is to ensure that the higher income earner contributes more towards the taxes rather than the lower income earner.

Under Income Tax, the rates of surcharge vary on the basis of the different class of taxpayers (i.e. assessee). Below table provides surcharge rates as applicable to difference assessee –

ASSESSEE	SPECIFIED LIMIT FOR APPLICABILITY OF SURCHARGE	RATE OF SURCHARGE
INDIVIDUAL	Cases wherein taxable income is between INR 50 Lakhs to INR 1 Crore	10% on the amount of income tax
	Cases wherein taxable income is more than INR 1 Crore	15% on the amount of income tax
NON-RESIDENT INDIVIDUAL	Cases wherein taxable income is between INR 50 Lakhs to INR 1 Crore	10% on the amount of income tax
	Cases wherein taxable income is more than INR 1 Crore	15% on the amount of income tax
HINDU UNDIVIDED FAMILY (HUF)	Cases wherein taxable income is between INR 50 Lakhs to INR 1 Crore	10% on the amount of income tax
	Cases wherein taxable income is more than INR 1 Crore	15% on the amount of income tax
ARTIFICIAL JURIDICAL PERSON / AOP / BOI	Cases wherein taxable income is between INR 50 Lakhs to INR 1 Crore	10% on the amount of income tax
	Cases wherein taxable income is more than INR 1 Crore	15% on the amount of income tax
FIRM	Cases wherein taxable income is more than INR 1 Crore	12% on the amount of income tax
DOMESTIC COMPANY	Cases wherein taxable income is between INR 1 Crore to INR 10 Crore	7% on the amount of income tax
	Cases wherein taxable income is more than INR 10 Crore	12% on the amount of income tax
FOREIGN COMPANIES	Cases wherein taxable income is between INR 1 Crore to INR 10 Crore	2% on the amount of income tax
	Cases wherein taxable income is more than INR 10 Crore	5% on the amount of income tax
CO-OPERATIVE SOCIETIES	Cases wherein taxable income is more than INR 1 Crore	12% on the amount of income tax
LOCAL AUTHORITIES	Cases wherein taxable income is more than INR 1 Crore	12% on the amount of income tax

ILLUSTRATION –

Let us take an example on surcharge for ay 2019-20 just to understand the levy of surcharge taking the income of say Mr. X (an individual), a salaried person, into consideration. The following table would help to understand the calculation of surcharge –

PARTICULARS	AMOUNT
Total Taxable Income of Mr. X	53,00,000
Total Tax Payable on above Income	14,02,500
Since Total Taxable Income of Mr. X is above INR 50 Lakhs surcharge would be applicable
Surcharge Payable (10% of INR 14,02,500)	1,40,250
Total Tax Payable (including surcharge)	15,42,750

It must be noted here that the surcharge is levied on the total income tax and not on the income of the assessee. Further, the Health & Education Cess payable @ 4% would be levied on the aggregate of both income tax payable and surcharge.