Payroll & statutory · Updated September 2026
Surcharge is an additional levy charged on top of your income tax once your total income crosses a high threshold. It is a tax on the tax, not on the income directly, and it applies before cess. Most salaried people never encounter it; it starts at total income above Rs 50 lakh.
| Total income | Surcharge rate |
|---|---|
| Above Rs 50 lakh up to Rs 1 crore | 10% |
| Above Rs 1 crore up to Rs 2 crore | 15% |
| Above Rs 2 crore up to Rs 5 crore | 25% |
| Above Rs 5 crore | 37% (old regime) |
The new tax regime caps the top surcharge rate at 25%, so it does not apply the 37% band. Capital gains that are taxed at special rates carry their own surcharge caps. These rates are set by the Finance Act and can change, so confirm the current position for the year you are computing.
When income only just crosses a threshold, the surcharge could otherwise cost more than the extra income earned. Marginal relief limits the additional tax plus surcharge so that it does not exceed the income above the threshold. It applies at every surcharge slab boundary.
On the tax. You compute tax at the slab rates first, then apply the surcharge percentage to that tax figure.
Yes, but the maximum rate is 25% rather than 37%. For very high incomes this makes the new regime materially cheaper.
Your employer, as part of the TDS computation, if your projected income is above Rs 50 lakh.
See whether surcharge affects you with the Income Tax Calculator, which applies the slabs and marginal relief for both regimes.