Surcharge on Income Tax FY 2020-21 (AY 2021-22)

Last updated on May 31st, 2021 at 05:08 pm

Surcharge on Income Tax FY 2020-21 (AY 2021-22)

TAX on TAX is called SURCHARGE. The surcharge is applicable only if the total taxable income exceeds a certain prescribed limit. This prescribed limit in the case of the individual assessee is Rs. 50 lakhs in India. This means surcharge is not applicable to people having a total taxable income of less than Rs. 50 lakhs. The surcharge is calculated on tax payable and not total income. The rate of the surcharge is determined based on total income but the calculation of surcharge is done based on tax payable. Education and higher education cess at the rate of 4% are to be calculated after adding a surcharge.

Rates of surcharge were enhanced in the Union budget 2019 and no further change in the rates of surcharge was made in the Union Budget 2020 or Union Budget 2021.

The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112A, and 115AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.

Below are the details of Surcharge applicable for Individual Assessee, Co-operative Societies, Firms, Domestic Companies and Companies (other than domestic companies) for FY 2020-21 (AY 2021-22).

1. Surcharge for Individual Assessee

The surcharge will be applicable if the total income exceeds Rs. 50 lakhs.

• If the total income is up to Rs. 50 Lakhs there will no surcharge.
• If the total income exceeds Rs. 50 lakhs but up to Rs. 1 crore then the surcharge will be 10% on applicable income tax.
• If the total income exceeds Rs. 1 crore but up to Rs. 2 crores then a surcharge will be 15% on applicable income tax.
• If the total income exceeds Rs. 2 crores but up to Rs. 5 crores then a surcharge will be 25% on applicable income tax
• If the total income exceeds Rs. 5 crores then a surcharge will be 37% on applicable income tax

Note: Surcharge will be subject to marginal relief.  So, the maximum increase in tax payable due to surcharge will be lower from the following

• Income above Rs. 50 lakhs/Rs. 1 Crore/Rs. 2 Crores//Rs. 5 Crores.
• Total amount payable as income-tax and surcharge less the Total amount payable as income-tax on total income of Rs. 50 lakhs/Rs. 1 Crore/Rs. 2 Crores//Rs. 5 Crores.

The same rate of surcharge will be applicable to HUFs, AOP, BOI, and Artificial Juridical Person as to the Individual assessee.

2. Surcharge for Co-operative Societies and Firms 

The Surcharge will be applicable only if the total income exceeds Rs. 1Crore.

• If the total income is up to Rs. 1Crore there will no surcharge.
• If the total income exceeds Rs 1 crore then the surcharge will be 12% on applicable income tax.

Note: Surcharge will be subject to marginal relief.  So, the maximum increase in tax payable due to surcharge will be lower from the following

• Income above Rs. 1 Crore.
• Total amount payable as income-tax and surcharge less the Total amount payable as income-tax on total income of Rs. 1 Crore.

3. Surcharge on Domestic Companies

The surcharge will be applicable only if the total income exceeds Rs. 1 Crore.

• If the total income is up to Rs. 1 crore there will no surcharge.
• If the total income exceeds Rs. 1 crore but less than Rs. 10 crores then a surcharge of 7% will be applicable on income tax.
• If the total income exceeds Rs. 10 crores then a surcharge will be 12% on applicable income tax.

Marginal Relief will be provided.

4. Surcharge on Companies (other than domestic companies)

The surcharge will be applicable only if the total income exceeds Rs. 1 Crore.

• If the total income is up to Rs. 1 crore there will be no surcharge levied.
• If the total income exceeds Rs. 1 crore but less than Rs. 10 crores then a surcharge of 2% will be applicable on income tax.
• If the total income exceeds Rs. 10 crores then a surcharge will be levied at 5% on the applicable income tax.

Marginal Relief will be provided.

In all other cases, like Dividend distribution Tax u/s 115 O, Tax on distributed income to shareholders/unitholders, etc. the surcharge of 12% is applicable.

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CA Ankita Khetan

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Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

She can be contacted at info.financepost@gmail.com

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