Surcharge Rates in New vs Old Tax Regime: Key Differences

A surcharge is an additional charge levied on the income tax amount (not total income) when an individual’s or entity’s income exceeds specified thresholds. It is applicable to individuals, HUFs, firms, companies, and other entities based on their income level.

The surcharge under Section 115BAC (New Tax Regime) and the Old Tax Regime differs in terms of applicability and rates.

1. Surcharge under Section 115BAC (New Tax Regime)

Under the new tax regime, the surcharge is applicable on total income exceeding ₹50 lakh which is as follows:

* including the income by way of dividend or specified capital gains (income under the provisions of section 111A, section 112 and section 112A of the Act)

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Note: If the new tax regime under Section 115BAC(1A) applies and your total income includes dividends or certain capital gains (covered under Sections 111A, 112, and 112A), the surcharge on the tax for that part of the income will not be more than 15%.

Note: The highest surcharge rate in the new regime is capped at 25%, unlike the old regime where it went up to 37%.

Further, in the case of an association of persons consisting of only companies as its members, and having its income chargeable to tax under new tax regime i.e. section 115BAC(1A) , the rate of surcharge on the income-tax shall not exceed 15%.

2. Surcharge under the Old Tax Regime

The surcharge rates under the old tax regime remains follows:

Note: The 37% surcharge applies only under the old regime and not under the new regime.

Additional Points:

• The surcharge is calculated on the income tax amount, not the total income.
• Marginal relief is available to prevent excessive tax burden due to a small increase in income.
• The Health & Education Cess (4%) is levied on the total tax (including surcharge) in both regimes.
• The rates mentioned in the article apply to the Assessment Year 2025-26 and beyond.

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