What Is The Tax Rate For Health And Education Cess?

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What Is The Tax Rate For Health And Education Cess
4% Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge. AMT : The assessee opting for this scheme have been kept out of the purview of Alternate Minimum Tax (AMT).
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What is cess tax in India?

Cess tax in India – Types of Cess after implementation of GST GST Compensation Cess, National Calamity Contingent Duty on Tobacco and Tobacco Products, Building and Other Construction Workers Welfare Cess, Road and Infrastructure Cess, Health and Education Cess, Cess on Crude Oil, Cess on Exports are the different types of cess in India.

The Union Government can impose cess in India, but before imposing it, a legislation has to be formulated and passed in the Parliament of India. The purpose of the cess has to be clear in the legislation. State Governments wanted to impose sugar cess on GST, Kerala Government wanted to impose cess on GST, but these cess can be levied only after approval of GST Council.

Surcharge is calculated on the total tax amount only, whereas cess is calculated on total tax and surcharge amount. Cess is a tax on tax collected for a specific purpose, for example, education cess collected has to be spent on education, whereas surcharge is a tax on tax and not levied for any particular purpose.
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What is the rate of surcharge in income tax?

Tax Rates 1. In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

Individuals
(Other than senior and super senior citizen)
Net Income Range Rate of Income-tax
Assessment Year 2023-24 Assessment Year 2022-23
Up to Rs.2,50,000
Rs.2,50,000 to Rs.5,00,000 5% 5%
Rs.5,00,000 to Rs.10,00,000 20% 20%
Above Rs.10,00,000 30% 30%
Senior Citizen
(who is 60 years or more at any time during the previous year)
Net Income Range Rate of Income-tax
Assessment Year 2023-24 Assessment Year 2022-23
Up to Rs.3,00,000
Rs.3,00,000 to Rs.5,00,000 5% 5%
Rs.5,00,000 to Rs.10,00,000 20% 20%
Above Rs.10,00,000 30% 30%
Super Senior Citizen
(who is 80 years or more at any time during the previous year)
Net Income Range Rate of Income-tax
Assessment Year 2023-24 Assessment Year 2022-23
Up to Rs.5,00,000
Rs.5,00,000 to Rs.10,00,000 20% 20%
Above Rs.10,00,000 30% 30%
Hindu Undivided Family (Including AOP, BOI and Artificial Juridical Person)
Net Income Range Rate of Income-tax
Assessment Year 2023-24 Assessment Year 2022-23
Up to Rs.2,50,000
Rs.2,50,000 to Rs.5,00,000 5% 5%
Rs.5,00,000 to Rs.10,00,000 20% 20%
Above Rs.10,00,000 30% 30%

Add: a, Surcharge : Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Rate of Surcharge
Assessment Year 2023-24 Assessment Year 2022-23
Range of Income Range of Income
Rs.50 Lakhs to Rs.1 Crore Rs.1 Crore to Rs.2 Crores Rs.2 Crores to Rs.5 Crores Rs.5 crores to Rs.10 Crores Exceeding Rs.10 Crores Rs.50 Lakhs to Rs.1 Crore Rs.1 Crore to Rs.2 Crores Rs.2 Crores to Rs.5 Crores Rs.5 crores to Rs.10 Crores Exceeding Rs.10 Crores
10% 15% 25% 37% 37% 10% 15% 25% 37% 37%

Note: (1) 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%. (2) From Assessment Year 2023-24 onwards: o The maximum rate of surcharge on tax payable on dividend income or capital gain referred to in Section 112, shall be 15%.

o The surcharge rate for AOP with all members as a company, shall be capped at 15%. However, marginal relief is available from surcharge in following manner- i, in case where net income exceeds Rs.50 lakh but doesn’t exceed Rs.1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

ii, in case where net income exceeds Rs.1 crore but doesn’t exceed Rs.2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.1 crore by more than the amount of income that exceeds Rs.1 crore.

iii, in case where net income exceeds Rs.2 crore but doesn’t exceed Rs.5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.2 crore by more than the amount of income that exceeds Rs.2 crore.

iv, in case where net income exceeds Rs.5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.5 crore by more than the amount of income that exceeds Rs.5 crore.b,

  • Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.
  • Note: A resident individual (whose net income does not exceed Rs.5,00,000) can avail rebate under section 87A.
  • It is deductible from income-tax before calculating education cess.

The amount of rebate is 100 per cent of income-tax or Rs.12,500, whichever is less.1.1. Special tax Rate for Individual and HUFs The Finance Act, 2020, has provided an option to Individuals and HUF for payment of taxes at the following reduced rates from Assessment Year 2021-22 and onwards:

Total Income (Rs) Rate
Up to 2,50,000 Nil
From 2,50,001 to 5,00,000 5%
From 5,00,001 to 7,50,000 10%
From 7,50,001 to 10,00,000 15%
From 10,00,001 to 12,50,000 20%
From 12,50,001 to 15,00,000 25%
Above 15,00,000 30%

Add: a, Surcharge : Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Range of Income
Rs.50 Lakhs to Rs.1 Crore Rs.1 Crore to Rs.2 Crores Rs.2 Crores to Rs.5 Crores Rs.5 crores to Rs.10 Crores Exceeding Rs.10 Crores
10% 15% 25% 37% 37%

Note: The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112, 112A and 115AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%. However, marginal relief is available from surcharge in following manner- i,

In case where net income exceeds Rs.50 lakh but doesn’t exceed Rs.1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs. ii, in case where net income exceeds Rs.1 crore but doesn’t exceed Rs.2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.1 crore by more than the amount of income that exceeds Rs.1 crore.

iii, in case where net income exceeds Rs.2 crore but doesn’t exceed Rs.5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.2 crore by more than the amount of income that exceeds Rs.2 crore.

iv, in case where net income exceeds Rs.5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.5 crore by more than the amount of income that exceeds Rs.5 crore.b,

Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge. Note 1: A resident individual (whose net income does not exceed Rs.5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess.

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The amount of rebate is 100 per cent of income-tax or Rs.12,500, whichever is less. Note 2 : The option to pay tax at lower rates shall be available only if the total income of assessee is computed without claiming specified exemptions or deductions: 2. Partnership Firm For the Assessment Year 2023-24, a partnership firm (including LLP) is taxable at 30%.

Add: ( a ) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

  • B ) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge 3.
  • Local Authority For the Assessment Year 2022-23 & 2023-24, a local authority is taxable at 30%.

Add: ( a ) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

Domestic Company
Assessment Year 2022-23 Assessment Year 2023-24
♦ Where its total turnover or gross receipt during the previous year 2019-20 does not exceed Rs.400 crore 25% NA
♦ Where its total turnover or gross receipt during the previous year 2020-21 does not exceed Rs.400 crore NA 25%
♦ Any other domestic company 30% 30%

Add: ( a ) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees.

The surcharge shall be subject to marginal relief, which shall be as under: ( i ) Where income exceeds Rs.1 crore but not exceeding Rs.10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs.1 crore by more than the amount of income that exceeds Rs.1 crore.

( ii ) Where income exceeds Rs.10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs.10 crore by more than the amount of income that exceeds Rs.10 crore ( b ) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.4.1.

Domestic Company
Assessment Year 2022-23 Assessment Year 2023-24
♦ Where it opted for section 115BA 25% 25%
♦ Where it opted for Section 115BAA 22% 22%
♦ Where it opted for Section 115BAB 15% 15%

Surcharge : The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10% irrespective of amount of total income. Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

MAT : The domestic company who has opted for special taxation regime under Section 115BAA & 115BAB is exempted from provision of MAT. However, no exemption is available in case where section 115BA has been opted. In that case, the provisions of Minimum Alternate Tax (MAT) applies, tax payable cannot be less than 15% (+HEC) of “Book profit” computed as per section 115JB.

However, MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange. For provisions relating to MAT refer tutorial on “MAT/AMT” in tutorial section.5.

Nature of Income Tax Rate
Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government 50%
Any other income 40%

Add: ( a ) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees.

However, the surcharge shall be subject to marginal relief, which shall be as under: ( i ) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

( ii ) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

Taxable income Tax Rate
Up to Rs.10,000 10%
Rs.10,000 to Rs.20,000 20%
Above Rs.20,000 30%

Add: ( a ) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

Note: From Assessment Year 2023-24 onwards, the rate of surcharge in the case of co-operative societies having income between 1 crore to 10 crores is reduced from 12% to 7%. ( b ) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.6.1.

Special tax rates applicable to a Co-operative societies

Taxable income Tax Rate
Any income 22%

Note: The Finance Act, 2020 has inserted a new Section 115BAD in Income-tax Act to provide an option to the co-operative societies to get taxed at the rate of 22% plus 10% surcharge and 4% cess. The resident co-operative societies have an option to opt for taxation under newly Section 115BAD of the Act w.e.f.

Assessment Year 2021-22. The option once exercised under this section cannot be subsequently withdrawn for the same or any other previous year. If the new regime of Section 115BAD is opted by a co-operative society, its income shall be computed without providing for specified exemption, deduction or incentive available under the Act.

The societies opting for this section have been kept out of the purview of Alternate Minimum Tax (AMT). Further, the provision relating to computation, carry forward and set-off of AMT credit shall not apply to these assessees The option to pay tax at lower rates shall be available only if the total income of co-operative society is computed without claiming specified exemptions or deductions
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What is the highest surcharge rate?

FAQs – Q. Is it compulsory to pay surcharge? Ans. Yes, in case your income in a financial year exceeds Rs.50 lakh, you are liable to pay surcharge over and above the tax payable.Q. Can marginal relief be claimed by individuals? Ans. Yes, marginal relief can be claimed by all persons for whom surcharge is applicable.Q.
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What is the meaning of surcharge rate?

Suggest a new Definition Proposed definitions will be considered for inclusion in the Economictimes.com Definition: As the name suggests, surcharge is an additional charge or tax. Description: A surcharge of 10% on a tax rate of 30% effectively raises the combined tax burden to 33%.

  1. In the case of individuals earning a net taxable salary of more than Rs 1 crore, a surcharge of 10% is levied on tax liability.
  2. However, marginal relief is also provided as sometimes the increase in tax liability after factoring surcharge becomes more than the increase in income above Rs 1 crore.
  3. Surcharge at the rate of 5% is levied on domestic corporations if net income is in the range of Rs 1 cr to Rs 10 cr.
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If the net income exceeds Rs 10 cr, surcharge at the rate of 10% is levied. Surcharge at the rate of 2% is levied on foreign corporations if the net income is in the range of Rs 1 cr to Rs 10 cr. If the net income exceeds Rs 10 cr, the surcharge is increased to 5%.
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What is 4% cess in tax?

Health and education cess was introduced by late Finance Minister Arun Jaitley in Union Budget 2018 replacing the earlier secondary and higher education cess of 3 per cent. – What Is The Tax Rate For Health And Education Cess What’s Health & Education Cess In Income Tax? Does It Impact You? EXPLAINED New Delhi : Whether you like it or not, income tax is an integral part of our professional lives. And health & education cess is an integral part of the income tax you pay every year.

A cess is a form of tax levied by the government for the development of a particular service or sector. It’s charged over and above direct and indirect taxes. Health and education cess was introduced by late Finance Minister Arun Jaitley in Union Budget 2018 replacing the earlier secondary and higher education cess of 3 per cent.

“Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge. Note: A resident individual (whose net income does not exceed Rs.5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess.

The amount of rebate is 100 per cent of income-tax or Rs.12,500, whichever is less,” according to Income Tax website. As the name suggests, health and education cess is collected by the government of India with an aim to improve the healthcare and educational facilities in the deprived areas of rural and semi-urban India.

According to FISDOM, the government uses these funds to:

Raise the standard of primary as well as higher education in India, with particular focus on rural and semi-urban areas.Run a mid – day meal scheme in schools, which has proved to be effective, especially in rural areas by checking the dropout rate in primary schools.To enhance the quality and access to education by providing seamless internet connectivity.Ensure online and digital connectivity to schools and colleges even in remote areas.To provide funds for salaries of teaching and allied staff.To fund special schemes like “Rashtriya Madhyamik Shiksha Abhiyan”.Create world-class infrastructure and opportunities by opening higher education institutes of national importance like IITs, IIMs, AIIMS across more states.

If the cess amount collected in a year remains unutilized for that financial year, it can be carried forward to the next year under the same head.
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What is the difference between tax cess and surcharge?

Key Difference Between Cess and Surcharge – The key difference between Cess and Surcharge is that Cess is a fixed tax, and Surcharge is variable and levied upon a specific set of citizens, unlike a cess tax. Cess is calculated over and above the base tax charge of the taxpayer, whereas the Surcharge is imposed on the payable tax and not the total income.
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How much is surcharge and cess?

What is the Difference between Cess and Surcharge? – The difference between cess and surcharge is as follows:

Cess Surcharge
The cess rate stands fixed at 4%. The surcharge rate varies among 10%, 15%, 25%, and 37%, depending on the total income of a taxpayer.
Authorities calculate cess on the surcharge and the total tax. Surcharge is calculated on the total tax amount only.
The Government levies cess on every taxpayer. The Government levies a surcharge on those individuals who have a higher taxable income.
Authorities use cess for a particular purpose only and cannot use it for any arbitrary reason. A surcharge, on the other hand, can be used for any reason. The reason does not have to be specified.
cess aims to raise funds for some particular expenditure cause. A surcharge aims to place a tax burden on those whose income is beyond Rs.50 lakhs.

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How much is surcharge and cess on income tax?

Income tax slab for Individual aged more than 80 years –

Income Tax Slab Tax Rates for Super Senior Citizens (Aged 80 Years And Above)
Income up to Rs 5,00,000* No tax
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%

NOTE:

  • An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
  • Surcharge applicability: – 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore. – 5% of income tax, where the total income exceeds Rs.1 crore

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How is surcharge calculated example?

What is Surcharge, Surcharge Meaning, Budget News, Surcharge Definition A surcharge — or additional charge — is essentially a tax levied on a tax. It is calculated on payable tax, not on income generated. So a surcharge of, say, 10 per cent on an existing tax rate of 30 per cent effectively raises the total tax rate to 33%.

  1. For example, if a tax is imposed at 30 per cent on an income of Rs 100, the total payable tax would be Rs 30.
  2. Then, a surcharge of 10 per cent calculated on Rs 30 would amount to Rs 3.
  3. So, the effective payability would be Rs 30 + Rs 3 = Rs 33.
  4. Union Budget 2019, while keeping surcharge unchanged for some high-income groups, raised it for ultra-high-networth individuals.

For those with an annual income in the range of Rs 50 lakh to Rs 1 crore, the surcharge of 10 per cent was kept unchanged from the previous year. Similarly, those earning Rs 1 crore to Rs 2 crore yearly also had to pay the same surcharge as the previous year; ie, 15 per cent.

A surcharge of 25 per cent is now charged for those with annual income between Rs 2 crore and Rs 5 crore for FY20. A surcharge of 37 per cent is charged on annual income in excess of Rs 5 crore for FY20.

The earlier surcharge on income-tax, capped at 15 per cent, is applicable for the current assessment year 2019-20. The new rates are applicable on income earned in FY20; ie AY 2020-21. As a result of the increase in surcharge, the effective tax rate for individuals in the Rs 2 crore to Rs 5 crore per year income bracket will be 39 per cent for FY20.

  • Similarly, the effective tax rate for individuals earning Rs 5 crore or more will be 42.7 per cent for FY20.
  • Earlier, a surcharge of 10 per cent was levied on individuals whose total income exceeded Rs 1 crore.
  • This rate was hiked to 12 per cent in Union Budget 2015, and further to 15 per cent in the Union Budget 2016.

The 2017 Budget imposed a surcharge on those with income above Rs 50 lakh. Companies with income above Rs 1 crore were also made liable to pay surcharge. : What is Surcharge, Surcharge Meaning, Budget News, Surcharge Definition
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What is the example of surcharge tax?

What is surcharge on income tax? Here’s how you can calculate it Calculating tax has always been an uphill task. From the classification of income to the determination of tax rate, the process can be quite challenging, especially for those who don’t love number crunching.

Another challenging level in tax computation could be how to calculate a surcharge. This is because the surcharge rate differs from person to person according to the amount and type of income. To help you understand, here is a low down on how to calculate a surcharge on income tax. First things first. What is a surcharge? The surcharge amount is calculated on the tax before adding a cess to it.

It is levied to put a high tax burden on rich people. It becomes a part of the Consolidated Fund of India and can be utilised for any purpose by the government. One of the biggest differences between surcharge and cess is the central government is not required to share the surcharge amount with state governments.

  • How much is the surcharge rate? The important point to note is that it is calculated on the basic tax.
  • For individuals, the surcharge rate is 10 per cent of the tax amount for income from Rs 50 lakhs but not exceeding Rs 1 crore.
  • The rate goes higher with the increase in income.
  • Hence, for income exceeding Rs 1 crore but not exceeding Rs 2 crore, it is levied at 15 per cent of the tax amount.

The next slab starts for income exceeding Rs 2 crores but not exceeding Rs 5 crores where a surcharge is computed at 25 per cent of the tax amount. For income exceeding Rs 5 crore surcharge is as high as 37 per cent of the tax amount. Is the surcharge calculation different for different incomes? Yes, there are at present, different surcharge rates for an individual and corporates depending on the level of income.

  • For corporates, in the case of a foreign company, if income is exceeding Rs 1 crore but not exceeding Rs 10 crores– 2 per cent of the tax amount and in case of income exceeding Rs 10 crores – 5 per cent of the tax amount.
  • In the case of a domestic company, where the total income of a domestic company is more than Rs.1 crore but does not exceed Rs 10 crores, a surcharge of 7 per cent is levied on the tax, and in case of income exceeding Rs 10 crores – 12 per cent of the tax amount,” says Yeeshu Sehgal, Head of Tax Market, AKM Global, a tax and consulting firm.

Points to keep in mind while calculating the surcharge The surcharge rate varies from income to income. The maximum rate of surcharge on the long-term capital gains of any type of asset is 15 per cent. “This maximum capping of the surcharge was implemented in the Union Budget 2022.

In the case of short-term capital gains, surcharge rates vary depending on the income level and as per the applicable slab rate to a taxpayer. The surcharge rate is always calculated on the tax amount and not on income,” says Sehgal. Sehgal explains, for example, Mr. A has received a salary of Rs 6 crore annually and LTCG from the sale of equity shares is Rs 4 crore 50 lakhs where the STCG from the sale of gold is Rs10 lakhs.

His tax computation will be as follows:

  • Salary income – Rs.6,00,00,000
  • LTCG from the sale of listed equity shares – Rs.4,50,00,000
  • STCG from the sale of gold – Rs.10,00,000

His total income (adding all the above) is Rs.10,60,00,000. Income that is liable for the normal tax rate is Rs.6,10,00,000 (salary + short-term capital gains).

  1. Income which is liable for the special tax @10 per cent is Rs.4,50,00,000 (long-term capital gains)
  2. Total income tax would be Rs 2,26,02,500 (as per the applicable slab rates)
  3. The surcharge shall be calculated as follows: 37% of the tax amount on the normal income and 15 per cent (maximum capping) on tax on long-term capital gains, the total surcharge would be Rs 73,75,125.
  4. Also read:

Published on: Nov 18, 2022, 11:33 AM IST Posted by: Mehak Agarwal, Nov 18, 2022, 11:28 AM IST : What is surcharge on income tax? Here’s how you can calculate it
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Who pays surcharge?

How Do Surcharges Work? – Surcharges are additional fees or taxes that are added to the purchase price of goods and services. Depending on the good or service, a surcharge can be flat fees or a percentage of the purchase price. It is added at the time of purchase by the seller or service provider. Surcharges are imposed by businesses, governments, service providers, and service professionals.
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How is cess calculated?

The rate for education cess amounts to 2 percent of the total taxable amount whereas the secondary and higher education cess is 1 percent of the total taxable amount making the comprehensive rate of education cess to be 3 percent of the amount of tax. In order to calculate this, assume a person earns 8 Lakhs per year.
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How much surcharge on income above 50 lakhs?

Surcharge on Income Tax – Latest Rates (with Examples)

Level of Income Surcharge on Income Tax
Rs.50 Lakhs to Rs.1 Crore 10%
Rs.1 Crore to Rs.2 Crores 15%
Rs.2 Crores to Rs.5 Crores 25%
More than Rs.5 Crores 37%

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What is the current cess rate?

Income tax slab for Individual who are more than 80 years –

Income Tax Slab Super Senior Citizens (Aged 80 Years And Above)
₹0.00 – ₹5.00 lakh* No tax
₹5.00 lakh – ₹10 lakh 20%
> ₹10 lakh 30%

NOTES: ○ The income tax exemption is up to ₹5 lakh for super senior citizens for FY 2018-19. ○ A 4% health and education additional cess is applicable on the taxable amount. A 10% surcharge is applicable on income tax, where total income exceeds ₹50 lakh to ₹1 crore and 15% of income tax, where total income exceeds ₹1 crore.
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How is health and education cess calculated?

Health and Education Cess Rate – The current health and education cess rate for FY 2023-2024 (AY 2024-2025) is 4% over the tax payable. It is applicable on income tax at all slabs. Cess (health and education cess) stands in contrast with surcharge that is only applicable to incomes above Rs.50 lakh.
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Is it mandatory to pay health and education cess?

Generally, cess is expected to be levied when there is a need to meet specific expenditure for public welfare and discontinued once the government gets enough funds for that purpose. The 4% health and education cess is the same for everybody, irrespective of which income tax slab one falls in.
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What is the full meaning of cess?

Cess Look up in Wiktionary, the free dictionary. For the hamlet in Norfolk, England, see, For the railway term, see, Cess (pronounced ) is a that is generally levied for promoting services like health and education. Governments often charge cess for the purpose of development in social sectors.

The word is a shortened form of “assess”. The spelling is due to a mistaken connection with census, It was the official term used in when it was part of the, but has been superseded by “”. The term was formerly particularly applied to local taxation. In the, it was applied, with a qualifying prefix, to any taxation, such as irrigation-cess and educational-cess.

They are collectively referred to as “cesses” in government censuses: “land revenue and cesses”.

  • In modern India, it refers to a tax earmarked for a particular purpose, such as education, and is levied as an additional tax on the basic tax liability.
  • In, it refers to the that was enacted there in 1665 and continued to be levied until the 18th century.
  • The term is used by the rubber industry in to refer to rubber export tax, which funds that country’s Office of Rubber Replanting Aid Fund.
  • It has also been used by the Ministry of Agriculture and Fisheries to denote a tariff on imports.

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What is cess tax example?

Example of Cess – Here is an example to demonstrate how cess works. For an education cess of 3%, where the personal income tax is 30%, a cess is applicable on this personal income tax amount of 30%. Hence, this total tax rate goes up to 30.9% (30% income tax + (3% of 30% income tax)). Visit the linked article to understand the as it is an important concept in the economy of a country.
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What is an example of cess in India?

What Is A Cess? –

Different from the usual taxes and duties like excise and personal income tax, a Cess is imposed as an additional tax besides the existing tax (tax on tax) with a purpose of raising funds for a specific task.

For example, the Swachh Bharat cess is levied by the government for cleanliness activities that it is undertaking across India.

The Union government is empowered to raise revenue through a gamut of levies, including taxes (both direct and indirect), surcharges, fees and cess. A cess, generally paid by everyday public, is added to their basic tax liability paid as part of total tax paid. Article 270 of the Constitution allows cess to be excluded from the purview of the divisible pool of taxes that the Union government must share with the States.

Divisible Pool

A divisible pool is a portion of Gross Tax Revenue (GTR) that is distributed between the Centre and the States. It consists of all taxes, except surcharges and cess levied for specific purpose, net of collection charges.

Difference between Cess and Tax
Cess Tax

A cess is imposed as an additional tax besides the existing tax (tax on tax).

It is a compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions.

While, the revenue coming from cess is first credited to the Consolidated Fund, and the government may then, after due appropriation from Parliament, utilise it for the specified purpose.

revenue from taxes like income tax is kept in the Consolidated Fund of India (CFI) and the government can use it for any purposes it deems fit.

The proceeds of a cess may or may not be shared with the state governments.

The proceeds of central taxes have to be divided at central and state level and shared.

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