Surcharge on income tax is an extra charge on the tax itself, not on income, and it starts only when total income crosses ₹50 lakh. For individuals the rate is 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore and, in the old regime only, 37% above ₹5 crore.
So someone with ₹60 lakh of income pays slab tax first, then 10% of that tax as surcharge, then 4% cess on the total. Marginal relief stops the surcharge from costing more than the income that pushed you over the line. The rates below apply for FY 2025-26 (AY 2026-27) and were kept for tax year 2026-27.
Quick facts
Starts at
Total income above ₹50 lakhRates
10%, 15%, 25%, 37%New regime cap
25%Cap on 111A, 112, 112A gains and dividends
15%Charged on
Income tax, before cessCess after surcharge
4%Relief
Marginal relief just above each threshold
Income tax surcharge slabs for individuals and HUFs
| Total income | Old regime | New regime |
|---|---|---|
| Up to ₹50 lakh | None | None |
| Over ₹50 lakh, up to ₹1 crore | 10% | 10% |
| Over ₹1 crore, up to ₹2 crore | 15% | 15% |
| Over ₹2 crore, up to ₹5 crore | 25% | 25% |
| Over ₹5 crore | 37% | 25% |
Two caps matter. In the new regime the rate never goes above 25%. And whichever regime you use, the part of tax that comes from dividends and from capital gains under 111A, 112 and 112A is surcharged at no more than 15%. A trader with ₹3 crore of mostly listed share gains therefore pays a far lower surcharge than a salaried person with the same income.
How to calculate surcharge on income tax
- Work out total income and the slab tax on it, plus tax on any special rate income.
- Find the surcharge rate from total income.
- Multiply the tax by that rate. Apply the 15% cap to the share of tax on dividends and listed gains.
- Check marginal relief if income is only a little above a threshold.
- Add 4% health and education cess on tax plus surcharge.
Old regime, ₹60 lakh salary income after deductions. Slab tax: ₹12,500 + ₹1,00,000 + 30% of ₹50,00,000 (₹15,00,000) = ₹16,12,500. Surcharge at 10%: ₹1,61,250. Subtotal ₹17,73,750. Cess at 4%: ₹70,950. Total ₹18,44,700.
Marginal relief on surcharge, with numbers
Without relief, earning ₹1 more than ₹50 lakh would add 10% to the whole tax bill. Marginal relief caps the rise: the extra tax and surcharge cannot be more than the income above the threshold.
New regime, taxable income ₹51,00,000.
- Tax on ₹51 lakh: ₹3,00,000 on the first ₹24 lakh plus 30% of ₹27 lakh (₹8,10,000) = ₹11,10,000.
- Surcharge at 10%: ₹1,11,000, making ₹12,21,000.
- Tax on exactly ₹50 lakh: ₹10,80,000. Income above the threshold: ₹1,00,000. Ceiling: ₹11,80,000.
- So tax plus surcharge is limited to ₹11,80,000; marginal relief is ₹41,000.
- Cess at 4%: ₹47,200. Total ₹12,27,200.
The same test runs at ₹1 crore, ₹2 crore and ₹5 crore. More cases are on the marginal relief page.
Surcharge on income tax under the new regime
The new regime has no 37% band. Income above ₹2 crore is surcharged at 25% however high it goes, so the top effective rate is 39% (30% slab, plus 25% surcharge, plus 4% cess). In the old regime, at above ₹5 crore, it is about 42.74%. This is one reason very high earners often move to the new regime even with deductions. See the new regime slabs for the base rates.
Surcharge for firms, LLPs and companies
| Taxpayer | Rate |
|---|---|
| Firm or LLP, income above ₹1 crore | 12% |
| Domestic company, income above ₹1 crore up to ₹10 crore | 7% |
| Domestic company, income above ₹10 crore | 12% |
| Domestic company under 115BAA or 115BAB | 10% flat, at any income |
The business and company tax rates page shows how these combine with the base rates.
Surcharge and cess on income tax: what to watch
| Error | Fix |
|---|---|
| Charging surcharge on income instead of on tax | Multiply the tax, not the income |
| Applying 37% in the new regime | The highest new regime rate is 25% |
| Surcharging listed share gains at 25% | Cap that part at 15% |
| Skipping marginal relief at ₹50 lakh or ₹1 crore | Compare with tax at the threshold plus the excess income |
| Adding cess before surcharge | Surcharge first, then 4% cess on the total |
This explains surcharge in general terms and is not advice for your case. Rates are set every Finance Act, so check the current figures with your tax adviser and the department's own website before you rely on them.
Sources we checked
- Finance Act, 2025, First Schedule
- Income-tax Act, 1961, section 115BAC
- Income-tax Act, 2025
Frequently asked questions
What is surcharge in income tax?
It is an additional tax charged as a percentage of your income tax when total income goes above ₹50 lakh. It is added before the 4% cess.
What is the income tax surcharge for AY 2026-27?
For income of FY 2025-26, individuals pay 10% above ₹50 lakh, 15% above ₹1 crore and 25% above ₹2 crore. Those in the old regime pay 37% above ₹5 crore.
Is surcharge on income tax lower in the new regime?
Only at the very top. Up to ₹5 crore the rates are the same. Above ₹5 crore the new regime stays at 25% while the old regime charges 37%.
Does surcharge apply to capital gains?
Yes, but the tax on dividends and on gains under 111A, 112 and 112A is surcharged at no more than 15%, even when income is above ₹2 crore.
How is surcharge treated under the Income-tax Act, 2025?
Surcharge continues for tax year 2026-27 with the same rates, set by the Finance Act each year. The method of calculation and marginal relief also continue.