how to calculate surcharge for the financial year 2006-07.?

Question

plz help me fast.......its for my board exams!!!!!!!!

Answer 1

if your annual income does not exceeds Rs.10 lac in financial year 2006-2007 in this case there is no surcherge . But when your Annual income exceeds 10 lac in finiancial year 2006-07 Surcharge will be lavied @10% on the actual amount of tax.

Answer 2

For individuals surcharge is levied on incomes above Rs 10,00,000 @ 10%. However marginal relief is available. Which means that the total tax and surcharge on income above Rs 10 lakh cannot be more than the tax on Rs 10 lakh by more than the amount by which the income exceeds Rs 10 lakh. Sounds like gibberish? I will explain with example.

Suppose income is Rs 10,10,000.

Tax will be 2,53,000(Rs 25,000 plus 30% of Rs 10,10,000-2,50,000)

Surcharge on this tax @ 10%=25,300

Total tax plus surcharge on Rs 10,10,000= 2,78,300

Tax on Rs 10,00,000=2,50,000(Rs 25,000 plus 30% of Rs 10,00,000-2,50,000)

Difference in tax is Rs 28,300(Rs 2,78,300-2,50,000)
Difference in income is Rs 10,000 (Rs 10,10,000-10,00,000)

Therefore actual Total tax plus surcharge on Rs 10,10,000 will be levied at 2,60,000(Rs 2,50,000 + 10,000) instead of rs 2,78,000

Remember beyond a certain level of income marginal relief will not be relevant as the the difference will narrow down and gradually dissappear.

Hope this clarifies things