## Surcharge ('Tax on Tax')

### A. Individual / HUF / AOP / BOI / AJP (Old Regime)

#### Important Restrictions

(i) Cap at 15% — Surcharge rates of 25% and 37% are NOT applicable on tax computed on:

(ii) Bifurcation when income crosses ₹2 cr / ₹5 cr due to CG / Dividend

If the threshold is crossed only because of CG/Dividend income, the surcharge on tax on other income is capped:

### B. Firm / Local Authority

Total Income	Surcharge
Upto ₹ 1 crore	NIL
Above ₹ 1 crore	12% of Tax

### C. Company & Co-operative Society (General Rates)

Worked example

### Example 1

Example 1 — Straight Surcharge

Mr. A, Total Income = ₹ 60,00,000 (entirely normal income).

### Example 2

Example 2 — Bifurcation when crossing ₹2 cr / ₹5 cr

Mr. Rohit's surcharge depending on composition:

Case	CG + Div	Other	Total Income	SC on tax (CG/Div)	SC on tax (Other)
I	15L	30L	45L	–	–
II	50L	40L	90L	10%	10%
III	80L	90L	1.70 cr	15%	15%
IV	2.20 cr	40L	2.60 cr	15%	15%
V	1 cr	2.5 cr	3.5 cr	15%	15%
VI	3 cr	4 cr	7 cr	15%	25%
VII	3 cr	6 cr	9 cr	15%	37%

⚠️ Common exam mistakes

Applying 25%/37% surcharge on tax on capital gains u/s 111A/112/112A and dividend income — it is capped at 15%.
Forgetting bifurcation: when total income crosses ₹2 cr / ₹5 cr solely because of CG/Dividend, even tax on 'other income' enjoys the capped surcharge.
Applying the individual surcharge slabs to firms — firms have only one surcharge slab (12% above ₹1 cr).
Applying domestic company surcharge rates (7%/12%) to foreign companies (whose rates are 2%/5%).

Reference: — Finance Act, 2025 - First Schedule

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Surcharge - Tax on Tax (Old Regime)

Worked example