Surcharge and Marginal Relief Calculator — Tax Year 2026-27
Enter your income by type. The calculator applies the section 3 surcharge rates of the Finance Act, 2026, the 15% cap on capital gains and dividends, marginal relief at each threshold and 4% cess, and shows every step.
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How the calculation works
- Tax before surcharge. Slab-rate income is taxed at the section 202(1) rates (new regime) or Part I-B, Paragraph A rates (old regime, by age). Short-term gains under section 196 are taxed at 20%, long-term gains under section 198 at 12.5% above ₹1,25,000, and other long-term gains under section 197 at 12.5%. Where slab-rate income is below the basic exemption limit, the shortfall reduces those gains (sections 196(2), 197(2) and 198(3)).
- Rebate. Under the new regime, section 156(2) gives up to ₹60,000 where total income is ₹12 lakh or less, with marginal relief just above it, limited by section 156(3) to tax at slab rates. Under the old regime, section 156(1) gives up to ₹12,500 where total income is ₹5 lakh or less. Tax under section 198 is outside the rebate (section 198(7)).
- Surcharge. Rates depend on total income (Finance Act, 2026, section 3(4) for the new regime and Part I-B, Paragraph F for the old regime). Surcharge on tax attributable to dividends and to gains under sections 196, 197 and 198 is capped at 15%.
- Marginal relief. Tax plus surcharge cannot exceed the tax plus surcharge on income equal to the threshold, plus the income above the threshold (section 3(5); Paragraph F, Table 2).
- Cess. 4% Health and Education Cess on tax plus surcharge (section 3(15)).
| Total income | New regime surcharge | Old regime surcharge |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| Above ₹50 lakh to ₹1 crore | 10% | 10% |
| Above ₹1 crore to ₹2 crore | 15% | 15% |
| Above ₹2 crore to ₹5 crore | 25% if income excluding capital gains and dividends exceeds ₹2 crore; otherwise 15% | 25% if income excluding capital gains and dividends exceeds ₹2 crore; otherwise 15% |
| Above ₹5 crore | Same as above (no 37% rate) | 37% if income excluding capital gains and dividends exceeds ₹5 crore |
The part of surcharge that relates to dividends and capital gains under sections 196, 197 and 198 never exceeds 15%.
Assumptions this calculator makes
- You are a resident individual. HUFs, firms, companies and non-residents have different rules.
- Dividend tax is taken as a proportionate share of slab-rate tax (average rate) for the 15% cap.
- For marginal relief, the tax “on an amount equal to the threshold” is worked out by reducing income in this order: non-dividend slab income, dividends, section 198 gains, section 197 gains, section 196 gains. The Act does not specify the order where income includes special-rate gains; when your income is mostly slab-rate income, this makes no difference.
- The basic exemption shortfall is applied to section 196 gains first, then section 197, then section 198.
- Agricultural income, income taxed at other special rates (for example lottery winnings) and relief under section 157 are not included.
Worked example
A resident under the new regime with ₹51,00,000 of slab-rate income:
| Tax at slab rates | ₹11,10,000 |
| Surcharge at 10% | ₹1,11,000 |
| Tax plus surcharge on exactly ₹50 lakh | ₹10,80,000 |
| Ceiling: ₹10,80,000 + ₹1,00,000 | ₹11,80,000 |
| Marginal relief | ₹41,000 |
| Cess at 4% | ₹47,200 |
| Total tax | ₹12,27,200 |
The full explanation, including where relief runs out, is in surcharge and marginal relief for tax year 2026-27.
Frequently asked questions
Does the new regime have a 37% surcharge?
No. For tax charged under section 202, the highest surcharge is 25%, and it applies only where income excluding dividends and capital gains exceeds ₹2 crore.
When does marginal relief apply?
When your income is just above ₹50 lakh, ₹1 crore, ₹2 crore or (old regime) ₹5 crore, and the surcharge would make tax plus surcharge rise by more than the income above that threshold.
Is surcharge charged on capital gains at 25%?
No. Surcharge on tax attributable to dividends and gains under sections 196, 197 and 198 is capped at 15% under both regimes.
Is cess charged before or after marginal relief?
After. The 4% Health and Education Cess is charged on income tax plus surcharge as reduced by marginal relief.
Does this work for FY 2025-26 (AY 2026-27)?
No. That year is taxed under the Income-tax Act, 1961 at the rates in Part I-A of the First Schedule. This calculator covers tax year 2026-27 under the Income-tax Act, 2025.
Sources
Finance Act, 2026, section 3(1), (4), (5), (6) and (15) and First Schedule, Part I-B, Paragraphs A and F, Gazette of India, 30 March 2026. Income-tax Act, 2025, sections 156, 196, 197, 198 and 202, Gazette of India, 21 August 2025.
General educational tool for tax year 2026-27, not tax advice. Results depend on the assumptions stated above; confirm your computation before filing.
The concept behind the number
This calculator gives you a figure. These pages explain the rules behind it and work through the decisions.