Tax term

Surcharge

An additional tax charge imposed by a particular law or schedule.

Shown separately from the bands, a surcharge sits on top of the schedule rather than inside it, so anyone adding up band rows by hand understates the bill. For 2025-26 the data here records section 4AB adding 9% to the salaried Division I tax once taxable income passes Rs 10,000,000, and the Finance Act 2026 rewrote the proviso so that no surcharge is payable on the 2026-27 table. Work the earlier year at taxable income of Rs 12,000,000: schedule tax of Rs 3,381,000 plus a surcharge of Rs 304,290 comes to Rs 3,685,290, while the same income under 2026-27 is Rs 3,174,000, a difference of Rs 511,290. Two habits cause the errors here. Readers apply last year’s surcharge to this year’s table, or they treat the threshold as inclusive when the rule triggers only above it, so income of exactly Rs 10,000,000 attracts nothing. Confirm which year’s surcharge text is in force with FBR.

Check the legal meaning in context and against the relevant tax year.