Suppose an assessee has taxable income of Rs. 60 lakhs, after considering all deductions, as applicable under the new regime for AY 25-26. Basic tax liability as per the applicable slabs would be Rs. 1475000. Surcharge thereon at the rate of 10% would be Rs. 147500. Base for 4% education cess would be Rs. 1622500 (1475000+147500), which works out to Rs. 64900. Thus total tax liability would be Rs. 1687400 (1475000+147500+64900). Now if I do the calculation in the following manner, would it be a correct way of calculating tax and legally save tax. for 30% tax, the income would be Rs. 44 lakhs. I break this into two parts. One is Rs 34 lakhs, for arriving at the taxable income of Rs. 50 lakhs. Balance Rs. 10 lakhs added to it makes total taxable income as Rs 60 lakhs after considering other slabs also. Since upto Rs. 50 lakhs taxable income , there is no surcharge applicable, hence on balance Rs. 10 lakhs, tax @ 30% is Rs 3 lakhs & surcharge thereon @ 10% Rs. 30000 & 4% education cess would be Rs. 1200. My basic tax liability remains at Rs. 1475000, whereas, my surcharge liability goes down from 147500 to 30000, giving an effective savings of Rs. 117500 & 4% education cess thereon would be Rs. 4700. Thus my total tax savings would be Rs. 122200. Is my understanding correct? I am not avoiding any tax, I am only recalculating the tax in a different way, hence there is no evasion of tax. If this is a right method, I think this can be applied for other slabs also, for different type of assessees also, who are liable to pay surcharge.
Income Tax Surcharge
Not correct. Tax liability is calculated over aggregate income without any breaks & surcharge is added over the total tax liability inculing the surcharge.
I am using the same logic, as is applied for calculating the tax liability based on various slabs.
Taxman have their own utility to calculate surcharge on tax. They don't accept any other logic.
The user's proposed method of splitting taxable income to bypass or reduce surcharge liability is legally incorrect. Surcharge applies to the total tax calculated on aggregate taxable income, and the income tax department's utilities compute surcharge based on total taxable income without incremental slab-wise segregation.
No. Surcharge is calculated on the income-tax on total taxable income, not only on the tax attributable to income above ₹50 lakh. At ₹60 lakh, the applicable 10% surcharge is therefore on the full basic tax of ₹14,75,000, subject to marginal relief where applicable. You cannot split the income to restrict surcharge to the tax on the excess ₹10 lakh.
For AY 2025–26 under the new regime, marginal relief applies when income just exceeds ₹50 lakh: the tax plus surcharge cannot exceed the tax payable on ₹50 lakh by more than the income exceeding ₹50 lakh. At ₹60 lakh, the excess is ₹10 lakh, so this cap does not reduce the surcharge in your example. Cess is then computed on tax plus surcharge. Your proposed ₹1,22,200 reduction is not available; the same principle applies at other surcharge thresholds and to other taxpayers where surcharge applies.
This calculation should be built into the return-preparation workflow, with surcharge and marginal relief applied to the aggregate income-tax liability. Manual tax work across multiple slabs and taxpayer profiles is difficult, and automation reduces repetitive calculations while keeping professional judgment in control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. For a more efficient compliance workflow, connect with us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1
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