Surcharge :

The rates of surcharge applicable for A.Y.2016-17 are as follows:

(i) Individual / HUF / AOP / BOI / Artificial juridical person / Co-operative societies / Local Authorities / Firms / LLPs

Where the total income exceeds Rs 1 crore, surcharge is payable at the rate of 12% of income-tax computed in accordance with the provisions of para (1)/(2)/(3)/(4) above or section 111A or section 112.

Marginal relief is available in case of such persons having a total income exceeding Rs 1 crore i.e., the additional amount of income-tax payable (together with surcharge) on the excess of income over ` 1 crore should not be more than the amount of income exceeding Rs 1 crore.

(ii) Domestic company

(a) In case of a domestic company, whose total income > Rs 1 crore but is ≤ Rs 10 crore

Where the total income exceeds Rs 1 crore but does not exceed Rs 10 crore, surcharge is payable at the rate of 7% of income-tax computed in accordance with the provisions of para (5)(i) above or section 111A or section 112. Marginal relief is available in case of such companies i.e. the additional amount of income-tax payable (together with surcharge) on the excess of income over Rs 1 crore should not be more than the amount of income exceeding Rs 1 crore.

Example Compute the tax liability of X Ltd., a domestic company, assuming that the total income of X Ltd. is Rs 1,01,00,000 and the total income does not include any income in the nature of capital gains. Answer The tax payable on total income of Rs 1,01,00,000 of X Ltd. computed@ 32.1% (including surcharge@7%) is Rs 32,42,100. However, the tax cannot exceed Rs 31,00,000 (i.e., the tax of Rs 30,00,000 payable on total income of Rs 1 crore plus Rs 1,00,000, being the amount of total income exceeding Rs 1 crore). Therefore, the tax payable on ` 1,01,00,000 would be ` 31,00,000. The marginal relief is Rs 1,42,100 (i.e., Rs 32,42,100 – Rs 31,00,000).

 

(b) In case of a domestic company, whose total income is > Rs 10 crore

Where the total income exceeds Rs 10 crore, surcharge is payable at the rate of 12% of income-tax computed in accordance with the provisions of para (5)(i) above or section 111A or section 112.

Marginal relief is available in case of such companies i.e. the additional amount of income-tax payable (together with surcharge) on the excess of income

Example Compute the tax liability of X Ltd., a domestic company, assuming that the total income of X Ltd. is Rs 10,01,00,000 and the total income does not include any income in the nature of capital gains. Answer The tax payable on total income of Rs 10,01,00,000 of X Ltd. computed@ 33.6% (including surcharge@12%) is Rs 3,36,33,600. However, the tax cannot exceed Rs 3,22,00,000 [i.e., the tax of Rs 3,21,00,000 (32.1% of Rs 10 crore) payable on total income of Rs 10 crore plus Rs 1,00,000, being the amount of total income exceeding Rs 10 crore]. Therefore, the tax payable on Rs 10,01,00,000 would be Rs 3,22,00,000. The marginal relief is Rs 14,33,600 (i.e., Rs 3,36,33,600 – Rs 3,22,00,000).

(iii) Foreign company

(a) In case of a foreign company, whose total income > Rs 1 crore but is ≤ Rs 10 crore

Where the total income exceeds Rs 1 crore but does not exceed Rs 10 crore, surcharge is payable at the rate of 2% of income-tax computed in accordance with the provisions of paragraph (5)(ii) above or section 111A or section 112. Marginal relief is available in case of such companies i.e., the additional amount of income -tax payable (together with surcharge) on the excess of income over Rs 1 crore should not be more than the amount of income exceeding Rs 1 crore.

(b) In case of a foreign company, whose total income is > Rs 10 crore

Where the total income exceeds Rs 10 crore, surcharge is payable at the rate of 5% of income-tax computed in accordance with the provisions of para (5)(ii) above or section 111A or section 112.

Marginal relief is available in case of such companies i.e. the additional amount of income-tax payable (together with surcharge) on the excess of income over Rs 10 crore should not be more than the amount of income exceeding Rs 10 crore.