SURCHARGE AND EDUCATION CESS ON INCOME TAX

There is a provision of surcharge as well as educational cess on the amount of income tax, which increases the income tax liability. We often remember the rate of income tax but forget about the surcharge and educational cess. In this post, there is complete information about surcharge and educational cess on the amount of income tax which we need to pay.

Surcharge: - surcharge is the charge which charged on the amount of income tax. However, the finance minister gave some relief to the taxpayers from the assessment year 2010-11 in the matter of surcharge. Now these are liable to pay the surcharge or not, complete list is as follows.

- Individual and H.U.F.-No surcharge

- Association of person and body-No surcharge

- Artificial juridical person- No surcharge

- Co-operative society and local society- no surcharge

- Surcharge charged to the TDS on the payments made to foreign companies, at the rate of 2.5 percent on the amount of income tax.

Educational cess: - educational cess is another form of surcharge which is levied on income tax for the purpose of increase the chances of education to the peoples. However there is no relief in the matter of educational cess from the finance ministry and almost every assessee need to pay the educational cess. The rate of the educational cess is 2% which is charged on the amount of income tax plus surcharge. Like if the tax amount is 20000 and surcharge is 2000, the educational cess will be calculated to 22000*2%, that is 440 rupees.

Secondary and higher educational cess: - there is also one more surcharge called secondary and higher educational cess which is charged at the rate of 1% on the amount off tax plus surcharge. Like from the above example the educational cess would be 22000*1%=220 and the total amount of cess will be 440+ 220=660.