Aggregate amount of Income tax and Surcharge (if applicable) is further subject to 4% ‘Health and Education Cess’ in the case of all types of taxpayers, in respect of AY 2022-23, i.e. all taxpayers are required to pay additional tax @ 4% over and above the amount of Income Tax computed inclusive of Surcharge.
Unlike the surcharge, no marginal relief is permitted in the case of the Health and Education Cess.
It may be noted that the new cess named as “Health and Education Cess” @ 4% has been levied from AY 2019-20 in lieu of “Education Cess” @ 2% and “Secondary and Higher Education Cess” @ 1% which was being levied upto AY 2018-19.
The 2% Education Cess was introduced to meet the government’s commitment to provide and finance universalized quality basic education for poor people in India. While this helped students complete primary education, the government realised the need for secondary and higher education cess and introduced a 1% secondary and higher education cess through Finance Act 2007. From then, all taxes had a 3% education and higher education cess.
In the Budget 2018, Finance Minister Arun Jaitley proposed various programs to meet the education and health needs of Below Poverty Line (BPL) and rural families. Therefore the Cess was increased by 1% to fund education and health proposals of Budget 2018. Further, the ‘Secondary and Higher Education Cess’ was eliminated and a 4% ‘Health and Education Cess’ was introduced from AY 2019-20.
Related Posts: >> Finance Act, 2022 <<
|Income Tax Slabs/ Rates:||Income Tax Cess, Surcharge & Rebate|
|Resident Individuals||Education Cess Rates|
|NRIs/ HUFs/ AOP/ BOI/ AJP||Surcharge Rates|
|Partnership Firms and LLPs||Marginal Relief from Surcharge|
|Domestic Companies||Rebate u/s 87A for Individuals|