# Surcharge — Additional Tax on Tax

Surcharge is an additional levy on the basic income tax when income exceeds specified limits.

## (1) Individual/HUF/AOP/BOI/AJP under Optional Scheme (Old Tax Regime)

### When Total Income does NOT include Income u/s 111A, 112A, 112 & Dividend

Total Income	Surcharge
Rs. 50 lakh to Rs. 1 crore	10%
Rs. 1 crore to Rs. 2 crore	15%
Rs. 2 crore to Rs. 5 crore	25%
Above Rs. 5 crore	37%

### When Total Income INCLUDES income u/s 111A, 112A, 112 & Dividend

Total Income	Surcharge
Rs. 50 lakh to Rs. 1 crore	10%
Rs. 1 crore to Rs. 2 crore	15%

Special Rules when TI > 2 cr:

On Income u/s 111A, 112A, 112 & Dividend → 15% (capped)
On Other Income (TI − above incomes) → As per regular slab

Special Rules when TI > 5 cr:

If "Other Income" > Rs. 2 cr but < Rs. 5 cr → Surcharge rates apply differentially
The 37% rate on Old Regime applies on Other Income only

Note: Other Income = Total Income − (111A + 112A + 112 + Dividend)

## (2) Individual/HUF/AOP/BOI/AJP under Default Scheme 115BAC(1A)

### When TI does NOT include Income u/s 111A, 112A, 112 & Dividend

Total Income	Surcharge
Rs. 50 lakh to Rs. 1 crore	10%
Rs. 1 crore to Rs. 2 crore	15%
Above Rs. 2 crore	25%

### When TI INCLUDES income u/s 111A, 112A, 112 & Dividend

Total Income	Surcharge
Rs. 50 lakh to Rs. 1 crore	10%
Rs. 1 crore to Rs. 2 crore	15%

If TI > 2 cr → Surcharge on 111A, 112A, 112 & Dividend capped at 15%; on Other Income, regular slab applies.

> CRITICAL NOTE: Under 115BAC(1A) (Default Scheme), Maximum Surcharge is 25% (NOT 37% like old regime).

## (3) Firm / LLP / Local Authority

Total Income	Surcharge
Above Rs. 1 crore	12%

## (4) Co-operative Society

Total Income	Surcharge
Rs. 1 crore to Rs. 10 crore	7%
Above Rs. 10 crore	12%

## (5) Company

Total Income	Foreign Company	Domestic Company
Rs. 1 cr to Rs. 10 cr	2%	7%
Above Rs. 10 cr	5%	12%

Worked example

### Example 1

Example 1: Mr. A (Individual, Old Regime) has Total Income of Rs. 75,00,000 with NO capital gains or dividend. Tax computed = say Rs. 20,00,000.

Surcharge: TI is between Rs. 50 lakh and Rs. 1 crore → 10% surcharge on tax

= Rs. 20,00,000 × 10% = Rs. 2,00,000

### Example 2

Example 2: Mr. B (Default Regime) has Total Income of Rs. 3 crore (no special income).

Surcharge: Maximum under default regime is 25%. So surcharge = 25% of tax.

Note: Under Old Regime, the same person would attract 37% surcharge — significantly more.

### Example 3

Example 3: Mr. C has Total Income of Rs. 3 cr — out of which Rs. 1 cr is LTCG u/s 112A and Rs. 2 cr is other income (Old Regime).

Surcharge:

On tax attributable to Rs. 1 cr LTCG (112A) → 15% (capped)
On tax attributable to Rs. 2 cr Other Income → Falls in 'TI > 1 cr but ≤ 2 cr' bracket → 15%

This is why the segregation matters — keeps surcharge on 111A/112A/112/Dividend capped at 15%.

### Example 4

Example 4: XYZ Domestic Co. has TI = Rs. 12 cr. Tax = say Rs. 3 cr.

Surcharge: 12% × Rs. 3 cr = Rs. 36 lakh

⚠️ Common exam mistakes

Applying 37% surcharge under DEFAULT regime — wrong. Max is 25% under 115BAC(1A).
Not segregating special incomes (111A, 112A, 112, Dividend) when TI > 2 cr — surcharge on these is capped at 15%.
Applying surcharge BEFORE computing rebate u/s 87A — always apply rebate first to tax, then surcharge.
For companies, using same surcharge rates for foreign and domestic — they are DIFFERENT (foreign: 2%/5%; domestic: 7%/12%).
Forgetting marginal relief — surcharge is subject to marginal relief if income marginally exceeds threshold.

Reference: — Finance Act

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Surcharge Rates for All Assessees

Worked example

⚠️ Common exam mistakes