Surcharge rate as per Income tax act 1961

"The surcharge rates under the Income Tax Act, 1961, vary based on the taxpayer's income level. Here are the current surcharge rates:"

The purpose of imposing a surcharge on income tax is primarily to increase the tax revenue from high-income earners. Here are a few reasons why a surcharge is needed:

1. Progressive Taxation:

• Fair Share: High-income individuals and entities are required to contribute more, ensuring a fair distribution of the tax burden.

• Reduce Inequality: Helps in reducing the income inequality gap by taxing those who can afford to pay more.

2. Revenue Generation:

• Additional Funds: Generates additional revenue for the government, which can be used for public services, infrastructure development, and social welfare programs.

• Targeted Funding: Provides targeted funds for specific needs without altering the overall tax structure.

3. Fiscal Responsibility:

• Balanced Budget: Helps in balancing the national budget by increasing the revenue without imposing a higher basic tax rate on everyone.

• Debt Reduction: Assists in managing the national debt by providing extra revenue.

4. Contingency Planning:

• Economic Fluctuations: Provides a buffer during economic downturns, as high-income earners are less likely to be severely affected compared to others.

• Crisis Management: Offers funds for unforeseen emergencies or crises, such as natural disasters or economic crises.

For Individuals, HUFs, AOPs, BOIs, and Artificial Judicial Persons:

Income between ₹50 lakhs and ₹1 crore: 10%

Income between ₹1 crore and ₹2 crores: 15%

Income between ₹2 crores and ₹5 crores: 25%

Income above ₹5 crores: 37%

For Domestic Companies:

Income between ₹1 crore and ₹10 crores: 7%

Income above ₹10 crores: 12%

For Foreign Companies:

Income above ₹1 crore: 2%

These surcharge rates are applied on top of the income tax liability. It's important to note that the surcharge is levied on the amount of income tax, not on the total income itself