Surcharge and cess on income tax: the 4% and the ₹50 lakh threshold
Health and education cess is 4% of income tax, charged on every taxpayer, which turns the 30% top slab into an effective 31.2%. Surcharge is an extra percentage of tax that starts at 10% above ₹50 lakh of taxable income, 15% above ₹1 crore and 25% above ₹2 crore under the new regime, with marginal relief at each threshold.
FY 2026-27 figures, rules verified 3 Sep 2026. Numbers assume basic at 40% of CTC, employer PF inside CTC and ₹2,400 professional tax unless stated.
Cess is applied after the rebate, so anyone whose tax is wiped by section 87A pays no cess either.
Surcharge applies to the tax, not the income: at ₹60 lakh of taxable income the tax of about ₹14.7 lakh attracts a 10% surcharge of ₹1.47 lakh, and cess is charged on the total.
The old regime keeps a 37% surcharge band above ₹5 crore; the new regime caps surcharge at 25%, which is one reason very high earners prefer it.
See the figure for your own salary on the in hand calculator.
Questions
Related terms
- Marginal relief — Marginal relief limits the extra tax to the extra income when taxable income crosses a threshold, so earning ₹10,000 above the ₹12 lakh rebate cap costs at most ₹10,000 of tax instead of the full slab tax of about ₹61,500.
- Section 87A rebate — The section 87A rebate cancels income tax of up to ₹60,000 for anyone whose taxable income is ₹12,00,000 or less under the new regime in FY 2026-27.