Surcharge
An additional charge on the income tax itself, not on income, applicable once total income crosses specified high thresholds, typically starting above ₹50 lakh.
Surcharge is a tax on tax: it's calculated as a percentage of the income tax already computed, not as a percentage of income itself, and it only kicks in once total income crosses specified thresholds, commonly starting above ₹50 lakh, with higher surcharge rates at higher income slabs. Someone with income just below a threshold and someone just above it can end up with a noticeably different effective tax rate, which is why marginal relief provisions exist to smooth out that jump.
Surcharge rates and thresholds differ somewhat by regime and by the type of income involved, since some capital gains and dividend income are capped differently. It mainly affects high-income taxpayers; the majority of individual filers never encounter it.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.