What is surcharge on income tax in India?

Surcharge is an additional tax levied on the income tax payable by high-income taxpayers. It is computed as a percentage of base income tax, not on income itself. For individuals, it ranges from 10% (income above Rs 50 lakh) to 37% (above Rs 5 crore under old regime) or maximum 25% under new tax regime. Partnership firms and LLPs pay 12% surcharge on income above Rs 1 crore. Domestic companies pay 7% for income between Rs 1–10 crore and 12% above Rs 10 crore.

💰 Income Tax Act 2025 / 1961 — All Taxpayer Categories

Surcharge & Cess Calculator
India FY 2026-27
with Marginal Relief

Calculate exact surcharge on income tax and 4% Health & Education Cess for all taxpayer types — individuals, companies, LLPs, firms, AOP/BOI. Includes marginal relief computation, effective tax rate, and capital gains surcharge cap (15%). FY 2026-27 rates. Free, instant, CA-verified.

H&E Cess (All)

Individual — Max (New)

25%

Individual — Max (Old)

37%

Firm / LLP Surcharge

12%

CG Surcharge Cap

15%

All Taxpayer Categories

Marginal Relief Auto-Computed

Capital Gains 15% Cap

Effective Tax Rate Shown

New + Old Regime

Free Calculator

Surcharge & Health Education Cess Calculator — FY 2026-27

Select your taxpayer type, enter income and base tax. The calculator computes applicable surcharge rate, marginal relief (if any), Health & Education Cess at 4%, and effective total tax rate — with a full step-by-step breakdown.

Surcharge & Cess Calculator — All Taxpayer Types

Individual / HUF · New or Old Regime · Marginal relief auto-applied

Tax Regime

Total Annual Income (₹) *

₹

Enter total taxable income for the financial year

Base Income Tax (Before Surcharge) (₹) *

₹

Tax computed on taxable income at applicable slab rate — before surcharge/cess

Capital Gains Tax Component (₹)

₹

STCG (20%) + LTCG (12.5%) + property LTCG — surcharge capped at 15% on this portion

Dividend Income Tax Component (₹)

₹

Tax on dividend income — surcharge capped at 15% on this portion

📊 Surcharge & Cess Breakdown — FY 2026-27

Surcharge Rate

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Surcharge Amount

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Cess Rate

Cess Amount

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Total Tax Payable

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Effective Tax Rate

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Tax as % of Income

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Marginal Relief

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Step	Component	Basis	Rate	Amount (₹)

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⚠️ Indicative. Marginal relief calculation may vary in edge cases. Consult a CA for final computation. Capital gains surcharge cap of 15% applies to Sections 111A, 112, 112A income and dividend income.

Rate Reference Tables

Surcharge Rates — All Taxpayer Categories FY 2026-27

Complete surcharge rate tables for all taxpayer types. Health & Education Cess of 4% applies to (income tax + surcharge) universally for all taxpayer categories.

1. Individual / HUF / AOP / BOI / AJP

Total Income Range	Surcharge Rate (New Regime)	Surcharge Rate (Old Regime)	Marginal Relief	Note
Up to ₹50 Lakh	NIL	NIL	N/A	No surcharge applicable
₹50L to ₹1 Crore	10%	10%	✅ Yes	Same in both regimes
₹1 Crore to ₹2 Crore	15%	15%	✅ Yes	Same in both regimes
₹2 Crore to ₹5 Crore	25%	25%	✅ Yes	Same in both regimes
Above ₹5 Crore	25% Capped	37%	✅ Yes	New regime capped at 25% max

⚠️ Critical Surcharge Rules for Individuals

✅ Capital Gains (Sec 111A/112/112A) + Dividends: Surcharge capped at 15% regardless of total income level — even if income is above ₹5 crore. The enhanced surcharge (25%/37%) is NOT levied on these income types.

✅ New Regime Cap: Under new tax regime, maximum surcharge is capped at 25% even for incomes above ₹5 crore (was 37% under old regime). This was a key Budget 2023 relief for very high income earners.

✅ Marginal Relief: Available at every surcharge threshold (₹50L, ₹1Cr, ₹2Cr, ₹5Cr). Tax + surcharge cannot exceed tax at previous threshold + (income − threshold). Prevents cliff-edge tax jumps.

✅ AOP with Company Members: Surcharge capped at 15% for AOPs whose members are all companies. This is applicable from AY 2023-24 onwards and continues in FY 2026-27.

2. Partnership Firm / LLP / Local Authority

Total Income	Tax Rate	Surcharge	H&E Cess	Note
Any income up to ₹1 Crore	30%	NIL	4%	No surcharge below ₹1 Cr
Income above ₹1 Crore	30%	12%	4%	Marginal relief available · 12% flat

3. Domestic Company

Company Type / Section	Tax Rate	Income ≤₹1 Cr	₹1–10 Crore	Above ₹10 Crore	H&E Cess
Turnover ≤₹400 Cr (Section 115BA)	25%	NIL	7%	12%	4%
Turnover >₹400 Cr (Normal)	30%	NIL	7%	12%	4%
Section 115BAA — New Regime (22%)	22%	Flat 10% surcharge regardless of income level			4%
Section 115BAB — New Manufacturing (15%)	15%	Flat 10% surcharge regardless of income level			4%

4. Foreign Company

Income Type	Tax Rate	Income ≤₹1 Cr	₹1–10 Crore	Above ₹10 Crore	H&E Cess
Royalty / Technical Fees from Govt/Indian concern	10%	NIL	2%	5%	4%
All Other Income	40%	NIL	2%	5%	4%

🏥 Health & Education Cess — Universal 4%

Health & Education Cess is levied at a flat 4% on the total of (Income Tax + Surcharge) — for every taxpayer category without exception. It replaced the earlier Education Cess (2%) and Secondary & Higher Education Cess (1%) from FY 2018-19. It is used to fund government health and education initiatives. Cess is not included in taxable income — it's an add-on on top of tax. Note: Cess is computed on (base tax + surcharge), not on income directly. Formula: Cess = (Base Tax + Surcharge) × 4%.

Key Concepts

Surcharge, Cess & Marginal Relief — Everything Explained

💰

What is Surcharge?

Surcharge is an additional tax levied on the income tax payable (not on income itself) by high-income taxpayers. It follows progressive taxation — richer taxpayers contribute proportionally more. It is calculated as a percentage of base tax, applies when income crosses specified thresholds (₹50L for individuals, ₹1Cr for companies), and is NOT the same as cess.

🏥

What is Health & Education Cess?

Cess is a dedicated levy at 4% on (income tax + surcharge), applicable to all taxpayers regardless of income level. Introduced to fund government health and education programmes. It replaced Education Cess (2%) + SHEC (1%) from April 2018. Formula: Cess = (IT + Surcharge) × 4%. Cannot be deducted as business expense.

🛡️

What is Marginal Relief?

Marginal relief prevents a cliff-edge situation where earning slightly above a surcharge threshold causes disproportionately higher tax. It ensures additional tax paid (including surcharge) cannot exceed additional income earned over the threshold. Example: if income is ₹51L and surcharge causes extra ₹80,000 tax on just ₹1L additional income, marginal relief caps that extra tax at ₹1L.

📈

Capital Gains Surcharge Cap (15%)

For income from capital gains (Sections 111A STCG, 112 LTCG, 112A LTCG) and dividend income — surcharge is capped at 15% regardless of total income level. Even if a person's total income is above ₹5 crore (attracting 25%/37% surcharge on normal income), the surcharge on capital gains and dividend income is restricted to 15%.

⚡

New Regime — 25% Max Cap

Under the New Tax Regime, the maximum surcharge rate for individuals is capped at 25% even for incomes above ₹5 crore. Under the Old Regime, surcharge goes up to 37% for incomes above ₹5 crore. This 12% difference makes the new regime significantly more attractive for ultra-high-income taxpayers.

🏢

Company Surcharge — Flat 10%

Companies opting for concessional rates under Section 115BAA (22%) or Section 115BAB (15%) pay a flat 10% surcharge regardless of income level — not the normal 7%/12% graduated structure. This predictability is one advantage of the concessional company tax regimes. Normal rate companies pay 7% surcharge for ₹1–10Cr and 12% above ₹10Cr.

📐 Marginal Relief — Worked Examples

Example 1 — Income ₹51 Lakhs (Individual, Old Regime)

Tax at ₹50L = ₹13,12,500
Tax at ₹51L = ₹13,62,500 + 10% surcharge = ₹14,98,750
Extra tax due to crossing threshold = ₹1,86,250
But extra income earned = ₹1,00,000 only
Marginal relief = ₹1,86,250 − ₹1,00,000 = ₹86,250
Final tax = ₹14,98,750 − ₹86,250 = ₹14,12,500 (+ 4% cess)

Example 2 — Income ₹1.01 Crore (Firm/LLP)

Tax at ₹1 Cr = ₹30,00,000 (30%)
Tax at ₹1.01 Cr = ₹30,30,000 + 12% surcharge = ₹33,93,600
Extra tax due to crossing threshold = ₹3,93,600
But extra income earned = ₹1,00,000 only
Marginal relief = ₹3,93,600 − ₹1,00,000 = ₹2,93,600
Final tax = ₹33,93,600 − ₹2,93,600 = ₹31,00,000 (+ 4% cess)

Complete Guide

Surcharge & Cess on Income Tax — FY 2026-27 Complete Guide

Surcharge is an additional tax imposed on the income tax payable by high-income taxpayers in India. It is computed as a percentage of the base income tax — not on total income — and applies only when total income exceeds prescribed thresholds. For individuals, HUFs, AOPs, and BOIs, surcharge is 10% on income between ₹50L–₹1Cr, 15% for ₹1–2Cr, 25% for ₹2–5Cr. Under the old regime, it goes to 37% above ₹5Cr; under the new regime, it is capped at 25%. This cap is one of the most significant advantages of the new tax regime for very high-income earners.

The Health & Education Cess of 4% is levied on every rupee of (income tax + surcharge) for all taxpayers — individual, company, firm, AOP — without any exemption or threshold. It is not an income-based levy but a universal add-on. Two critical exceptions govern surcharge calculation: (1) Capital gains income under Sections 111A (STCG), 112 (LTCG), and 112A (LTCG equity) as well as dividend income is subject to a maximum 15% surcharge cap regardless of total income level; (2) Marginal relief ensures that the additional tax (including surcharge) from crossing a threshold cannot exceed the additional income earned. TAXAJ's CA team handles surcharge computation, marginal relief application, and ITR filing for all taxpayer categories including high-income individuals, companies, and LLPs.

FAQ

Surcharge & Cess — Most Asked Questions

Surcharge is an additional tax levied on the income tax amount (not on income itself) by taxpayers with high incomes. It follows progressive taxation principles — higher income earners pay proportionally more. For individuals, it ranges from 10% (income above ₹50L) to 37% (income above ₹5Cr under old regime) or 25% maximum under new regime. For partnership firms and LLPs, it's 12% on income above ₹1 crore. For domestic companies, it's 7% for income between ₹1–10Cr and 12% above ₹10Cr. Surcharge rates remained unchanged in Budget 2025 and Budget 2026.

Health & Education Cess is levied at a flat 4% on the total of (income tax + surcharge), applicable to all taxpayers — individuals, companies, firms, AOP — without any threshold or exemption. Formula: Cess = (Base Tax + Surcharge) × 4%. It was introduced in FY 2018-19 replacing the earlier Education Cess (2%) and Secondary & Higher Education Cess (1%). Cess is not deductible as a business expense and cannot be claimed as a credit against income tax. The final tax payable is: Base Tax + Surcharge + Cess = Base Tax × (1 + surcharge rate) × 1.04.

For individuals in FY 2026-27: New Tax Regime: maximum 25% surcharge (for income above ₹5 crore — same rate as ₹2–5Cr range). Old Tax Regime: maximum 37% surcharge (for income above ₹5 crore). At ₹2–5Cr range, both regimes have 25% surcharge. The cap at 25% under the new regime is a significant benefit for ultra-high-income individuals — saving 12 percentage points of surcharge on high tax liabilities. Note: even with 37% surcharge, capital gains and dividend income surcharge is capped at 15%.

Marginal relief prevents a disproportionate tax burden when income just crosses a surcharge threshold. Without marginal relief, earning ₹1 more above a threshold could trigger a surcharge that costs more than the extra income earned. Marginal relief ensures: Additional tax (including surcharge) ≤ Additional income earned over the threshold. It is available at each threshold — ₹50L, ₹1Cr, ₹2Cr, and ₹5Cr for individuals; ₹1Cr for firms and companies. Marginal relief is automatically calculated in TAXAJ's Surcharge & Cess Calculator above — select your taxpayer type and enter income and base tax.

Yes, but with a crucial cap. Surcharge on income from capital gains under Sections 111A (STCG on equity, 20%), 112 (LTCG, 12.5%), and 112A (LTCG on equity/MF, 12.5%) as well as dividend income is capped at 15% regardless of total income level. So even if a person's total income is ₹10 crore (which would attract 25%/37% surcharge on normal income), the surcharge on capital gains and dividend portions is restricted to 15%. The calculator above handles this split computation automatically when you enter capital gains tax separately.

For FY 2026-27, partnership firms (including LLPs) are taxed at a flat 30% income tax rate. Surcharge is NIL if total income is ₹1 crore or below. Surcharge is 12% on the income tax payable if total income exceeds ₹1 crore. There is only one surcharge rate for firms — no graduated structure like individuals. Marginal relief is available when income marginally crosses ₹1 crore. Health & Education Cess of 4% applies on (tax + surcharge). TAXAJ handles LLP tax compliance and ITR filing.

Domestic companies opting for the concessional tax rate under Section 115BAA (22%) or Section 115BAB (15% for new manufacturing companies) pay a flat 10% surcharge on their income tax — regardless of total income level. This is different from the normal company surcharge structure (7% for ₹1–10Cr, 12% above ₹10Cr). The flat 10% surcharge under 115BAA/115BAB provides predictability for planning purposes. These companies also cannot claim MAT credit or carry forward AMT credit. The effective tax rate under 115BAA is: 22% + 10% surcharge + 4% cess = 25.168% approximately.

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Surcharge & Cess CalculatorIndia FY 2026-27with Marginal Relief

Surcharge & Health Education Cess Calculator — FY 2026-27

Surcharge & Cess Calculator — All Taxpayer Types

Surcharge Rates — All Taxpayer Categories FY 2026-27

1. Individual / HUF / AOP / BOI / AJP

⚠️ Critical Surcharge Rules for Individuals

2. Partnership Firm / LLP / Local Authority

3. Domestic Company

4. Foreign Company

🏥 Health & Education Cess — Universal 4%

Surcharge, Cess & Marginal Relief — Everything Explained

What is Surcharge?

What is Health & Education Cess?

What is Marginal Relief?

Capital Gains Surcharge Cap (15%)

New Regime — 25% Max Cap

Company Surcharge — Flat 10%

📐 Marginal Relief — Worked Examples

Surcharge & Cess on Income Tax — FY 2026-27 Complete Guide

Surcharge & Cess — Most Asked Questions

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Surcharge & Cess Calculator
India FY 2026-27
with Marginal Relief