Cess On Income Tax
cess on income tax
A cess on income tax is a surcharge levied on income in addition to the regular income tax. It is imposed by the government as a means of raising additional revenue.
Rate of cess:
The cess rate varies from country to country. In India, for example, the current cess rate is 2%. In Pakistan, the cess rate is 3%.
Eligibility:
The cess applies to all individuals and corporations who are liable to pay income tax. However, certain categories of income, such as agricultural income and income from certain professions, are exempt.
Purpose:
The cess is primarily used to fund specific programs or projects, such as healthcare, education, or infrastructure development. It can also be used to generate additional revenue for the government.
Examples:
- In India, the income tax cess of 2% is calculated on the total taxable income. For example, if a person earns Rs. 1 lakh, the total income tax payable would be Rs. 18,000, which includes the cess.
- In Pakistan, the income tax cess of 3% is calculated on the gross income. For example, if a person earns Rs. 2 lakh, the total income tax payable would be Rs. 60,000, which includes the cess.
Additional notes:
- The cess is a temporary levy and is not permanently enshrined in the law.
- The cess rate can be changed by the government at any time.
- The cess is paid in addition to other income taxes.
- The amount of cess paid can vary depending on the country and the specific tax regulations.
