Surcharge for AY 2023-24

What is a Surcharge?

It is an additional amount of money that is charged when certain goods or services are purchased. It is not applied to every taxpayer. Instead, especially on taxpayers earning a higher income, beyond a limit set by the government.
Continue reading the guide to help you know about the income tax surcharge for AY 2023-24 as we are in the end month of the 2022.

What do you mean by Surcharge under Income tax?

Surcharge is applied on tax and not on income and varies on different taxpayers depending upon the income tax slabs they fall in. Surcharge is also known as an additional charge that is applicable on the income tax liability if a taxpayer falls under 30% slab rate.

Moreover, as per the provision stated in the Income Tax Act, surcharge allow businesses to indirectly pass costs on to the consumer by listing a charge separately from the cost of goods or service. And this is why, it is added to the price of goods and services at the point of sale of behalf of the government.

If you have a doubt as to. whether paying surcharge is compulsory or not? So, let me inform you, an individual taxpayer having an annual income of more than 1 crore has to compulsorily pay a surcharge of 10% as they have good earning.

Let us now come to the surcharge rate applicable on individuals being residents and non-residents, HUFs,

Surcharge on Income tax for Individuals 2023-24

The rates of surcharge mentioned in the below table cover individuals other than senior and super-senior citizens.

A surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits:-

Points to remember

1. The Surcharge rate of 25% and 37% as the case may be is not levied, from income charged under Sections 11A, 12A, 115AD.
2. The maximum rate of charge applicable under this category is 15%.
3. As we are about to enter in the assessment year 2023-24, it is important for all taxpayers to know that the maximum rate of surcharge on tax payable on dividend income or capital gain under Section 112, shall be 15%.
4. Also, from AY 2023-24 onwards, the surcharge rate for AOP with all members as a company shall be limited to 15% of surcharge rate.

Rate of Surcharge for Non-resident Individual/HUF

Here is the surcharge rate applicable on non-resident individuals and HUFs which is levied on the amount of income tax if total income of an assessee exceeds specified limits-

Surcharge applicable to a firm

In the case of a firm, the surcharge levied is @12% on the amount of income tax when a firm’s net income exceeds Rs. 1 crore. Also, where a surcharge levied, health and education cess of 4% will be levied on the amount of income tax plus the surcharge.

Surcharge applicable to domestic company

In addition to the tax rate applied, surcharge applicable on a domestic company is @7% on the amount of income tax when the net income of a domestic company exceeds Rs. 1 crore, however, does not exceeds Rs. 10 crores and 12% on the amount of income tax if net income exceeds Rs. 10 crores.

Surcharge on Foreign Company

In addition to the income tax slab rate applicable, surcharge is levied @2% on the amount of income if net income exceeds Rs. 1 crore however, does not exceed Rs. 10 crore and 5% on the amount of the income tax if the net income exceeds Rs. 10 crore. Additionally, health and education cess (HEC) shall be also applicable @4% on the amount of income tax plus surcharge.

Income tax surcharge on Co-operative Society

Surcharge is levied @ 12% on the amount of income-tax where net income exceeds Rs. 1 crore . In a case where surcharge is levied, HEC of 4% will be levied on the amount of income-tax plus surcharge.

Surcharge applicable on local authorities

Surcharge is levied @ 12% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, HEC of 4% will be levied on the amount of income tax plus surcharge.

All in all, this was a short guide elaborating on the surcharge rates applicable for AY 2023-24 which be known by every taxpayer liable to pay income tax. Stay tuned to know more about income tax and other related provisions therein.