The government imposes many types of taxes, which are called cess and surcharge, in addition to tax on people with high income and income. Through this article, we are going to give you information about how much surcharge is taken from high-income people and when it takes place and other facts related to it.
What is the surcharge?
The surcharge is also called surcharge. The surcharge levied by the government on the current tax is called surcharge. Surcharge is not levied on all taxpayers. It is imposed on people with income above just one limit. Through surcharge, the government wants to ensure greater contribution of the rich than other taxpayers in revenue and the government earns additional revenue through it. The revenue earned from surcharge is not passed on to the states.
- Surcharge in India was first introduced in the 2013 budget. During this time the UPA government imposed a surcharge of 10 percent on the rich people.
- In the year 2015, the NDA government increased the surcharge to 12% and in the 2016 budget it was increased to 15%.
There are mainly two types of surcharge –
Personal Surcharge – This surcharge is decided according to the net income of the person. If a person’s income is between 50 lakh to one crore, then 10 percent surcharge is levied on him. If the income of a person is more than 1 crore rupees, then 15 percent surcharge is levied on him. Hence surcharge is levied on the basis of your income. A maximum of 37 percent personal surcharge is levied. Surcharge is levied on HUF, association of individuals, lonely person etc.
Company Surcharge – Surcharge on domestic and foreign companies is called company surcharge. When the income of a domestic company is less than Rs 10 crore, a surcharge of 7% is taken from it. A surcharge of 12% is levied if the income of the domestic company exceeds Rs 10 crore. If foreign companies earn more than Rs 10 crore, a surcharge of 5% is imposed on them.
Current Surcharge Rates
Surcharge rates are different for different categories of taxpayers. The current rates of surcharge applicable for the financial year 2019-20 are as follows –
|Taxpayer||Income range||Surcharge on income tax|
|Single person, HUF, association of individuals||More than Rs 50 lakh but less than Rs 1 crore||10%|
|Single person, HUF, association of individuals||More than Rs 1 Crore, but less than Rs 2 Crore||15%|
|Single person, HUF, association of individuals||More than Rs 2 crore but less than Rs 5 crore||25%|
|Single person, HUF, association of individuals||More than 5 crores||37%|
|Firms, Local Authorities and Cooperative Societies||More than Rs 1 crore||12%|
|Domestic company||More than Rs 1 crore but less than Rs 10 crore||7%|
|Domestic company||More than 10 crores rupees||12%|
|foreign company||More than Rs 1 crore but less than Rs 10 crore||2%|
|foreign company||More than 10 crores rupees||5%|
A surcharge is levied by the government on income tax, not by your earning, but by high-paying taxpayers.
Examples – Assuming Shyam’s total income is Rs 60 lakhs during the financial year 2017-18, his income is taxed at 15 lakhs. Shyam’s income is between 50 lakh and 1 crore. Therefore he will have to pay 10 percent surcharge on his tax (15 lakhs).
Cess is also called cess. Cess is imposed by the government to serve a particular purpose. The government imposes cess when the government needs additional capital in addition to the revenue from tax for a particular job. When the government’s objective is served, the cess is discontinued. Cess also does not have a share of states like surcharge. Cess applies to all taxpayers, irrespective of the amount of their income.
Let Ram’s total income in the financial year 2017-18 was Rs 4.5 lakh. On this, Ram will have to pay a total income of Rs 10 thousand. Now 4 percent education and health cess has been imposed on income tax in the financial year 2017-18, then Ram will have to pay 4 percent education and health cess on his 10 thousand income tax. So 4 percent of 10 thousand = 400 rupees. Now Rama will have to pay 10 thousand income tax and Rs 400 cess, that is, a total tax of Rs 10400.
Difference between cess and surcharge
- Cess is charged as an additional tax for a particular purpose, while surcharge is taken from the rich and some from special taxpayers.
- Cess is charged from every taxpayer, while surcharge is only from the rich or those earning above a limit.
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