Surcharge with statutory marginal relief.
Surcharge payable
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Income tax (before surcharge)
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Marginal relief applied
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Your breakdown
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Surcharge is a tax on your tax
Once your total income crosses ₹50 lakh, the income tax department adds a surcharge calculated on the tax itself, not on the income. The bands are 10% of tax above ₹50 lakh, 15% above ₹1 crore, and 25% above ₹2 crore. Under the old regime there is a further 37% band above ₹5 crore, but the new regime caps surcharge at 25%, which is a meaningful saving for very high earners and one reason the new regime often wins at the top end. This tool computes the surcharge on the income you enter, applies the right band, and then applies statutory marginal relief so a small overshoot of a threshold never blows up your bill.
How marginal relief stops a cliff
Without relief, earning ₹1 over ₹50 lakh would suddenly attach 10% surcharge to your entire tax, which could be lakhs of rupees for one extra rupee of income. Marginal relief fixes this by capping the combined increase in tax-plus-surcharge so it can never exceed the income you earned above the threshold. The calculator handles salary or other ordinary income. Note that surcharge on equity capital gains under sections 111A and 112A and on dividends is separately capped at 15% even for the highest earners, so if your income is gains-heavy your effective surcharge can be lower than the headline band.
Worked example: ₹51 lakh salary, new regime
Take the default ₹51,00,000 of taxable salary income under the new regime. Income tax before surcharge works out to ₹11,10,000. The 10% band would add ₹1,11,000 of raw surcharge. But you are only ₹1,00,000 above the ₹50 lakh threshold, and marginal relief caps the extra tax-plus-surcharge at that ₹1,00,000. The relief is ₹41,000, so the surcharge you actually pay is ₹70,000.
Do not forget the 4% cess on top
This is the most common reason a self-calculated number disagrees with the final demand. The ₹70,000 here is only the surcharge. After surcharge, a 4% Health and Education cess applies on the sum of tax plus surcharge. So your total addition over the base tax is larger than the surcharge alone. The calculator deliberately isolates surcharge so you can see the band and the relief clearly; for your full liability you would add the cess and then subtract any TDS and advance tax already paid. The relevant ITR for incomes at this level is usually ITR-2 for salaried individuals without business income.
When capital gains change the picture
The headline bands assume your income is ordinary income such as salary or interest. The law treats certain income types more gently. Surcharge on long-term and short-term equity capital gains under sections 111A and 112A, and on dividend income, is capped at 15% no matter how high your total income climbs. So a person with ₹3 crore of income that is mostly equity capital gains does not pay 25% surcharge on the tax attributable to those gains; that slice is capped at 15%. This is why two people with the same total income can pay very different surcharge depending on where the income comes from. The calculator applies the general band to your total tax, which is correct for salary or business income. If a large part of your income is equity gains or dividends, your actual surcharge will be lower than the figure shown, because the capped portion is computed separately in the return. It is one more reason the new regime, with its 25% ceiling, tends to favour high earners whose income is a blend of salary and market gains.
Why does my surcharge fall to almost nothing just over ₹50 lakh?
That is marginal relief working exactly as intended. Right at the threshold the relief absorbs most of the surcharge, and it tapers off as your income rises further above ₹50 lakh. By the time you are comfortably past the threshold, the relief shrinks to zero and you pay the full band rate on your tax.
Does the new regime really cap surcharge at 25%?
Yes. The highest 37% surcharge band exists only under the old regime, above ₹5 crore of income. Under the new regime the top surcharge rate is 25%, which lowers the effective tax rate for ultra-high earners and is a genuine point in the new regime’s favour at that level.