Income Tax Surcharge for the AY 2014-2015 & 2015-2016
Surcharge is a fee or charges that are added to the tax. For the purpose of tax calculation, surcharge is charged at the rate of 10% for an individual and others (except for a domestic and foreign company) if the total income is above Rs 1 Crore.
For a domestic company and foreign company surcharge is 5% and 2% respectively if total income is in between of Rs 1 Crore to Rs 10 Crore. If it is more than Rs 10 Crore then surcharge for a domestic company is 10% and for foreign company its 5%.
Education cess of 2% will be calculated on the total amount of tax and surcharge. In the same way, secondary and higher secondary cess will also be calculated @ 1% of tax and surcharge.
Example for calculation of surcharge and Cess
Suppose your Taxable Income is Rs. 1 Crore
Tax @ 30% is Rs. 30 Lakhs
Surcharge will be calculated @ 10% assuming the tax payer is an individual. So surcharge amount will be Rs 3, 00,000
Education cess and secondary and higher secondary cess @ 3% will be calculated on Tax + Surcharge = (30 lakhs + 3 lakhs) * 3%= .99 lakhs
Total amount to be paid = 30+3+.99=33.99 lakhs
Marginal Relief in the Case of Surcharge
If your net income exceeds Rs. 1 Crore then total amount payable as tax and surcharge on such income shall not exceed the total amount payable as tax on net income of Rs. 1 Crore by more than the amount of income that exceeds Rs. 1 Crore.
There is another marginal relief for corporate assessee (i.e. domestic company or foreign company). In the case of corporate assessee, if the net income of a corporate assessee for the assessment year 2014-2015 exceeds Rs. 10 Crore then the total amount payable as tax and surcharge shall not exceed the total amount payable as tax and surcharge on a net income of Rs. 10 Crore by more than the amount of income that exceeds RS. 10 Crore.
Surcharge in the case of TDS/TCS
Surcharge will not be deducted if any salary paid to a resident or non resident having a total income of less than Rs. 1 Crore. If it exceeds 1 Crore then 10% as surcharge will be applicable to you i.e. 10% on your tax has to be collected as TDS.
If any payment or credit other than salary is given to a non resident or foreign company which exceeds Rs. 1 Crore then Surcharge in addition to the tax rate has to be collected and deposited with the department. Surcharge as discussed above will be applicable is this case.