The surcharge on income tax is unlikely to be done away with in the Budget. Government officials told Business Standard the general view was surcharges should continue in the wake of the additional costs the Centre has incurred because of the tsunami.
The government is also saddled with an additional expenditure of Rs 26,000 crore (Rs 260 billion) in the next fiscal year on account of the recommendations of the Twelfth Finance Commission.
At present, the government levies a 10 per cent surcharge on individuals and Hindu Undivided Families with annual income of over Rs 850,000. For corporates, co-operative societies and local authorities, the surcharge is levied at 2.5 per cent.
Several surcharges are also levied on indirect taxes for various purposes, including the development of the sector as is the case with textiles and agricultural products in the form of the APEDA cess.
The Kelkar Committee on direct taxes had recommended doing away with the surcharge since it increased the marginal tax rate and adversely affected compliance.
© 2025