Surcharge

Surcharge Definition 

A surcharge is an additional fee added on top of the final bill when using non-cash payment methods. It compensates for merchant services, costlier products, or regulatory expenses. The surcharge might be a flat fee or a percentage of the transaction amount. 

It applies to various sectors, like healthcare, telecom, and tourism. The businesses pass the surcharge to the respective banks or authorities. Some laws, however, restrict businesses from adding a surcharge to the customer's final bill. 

Understanding Surcharge 

A surcharge is an extra fee added to the basic price of a product or service. It's added on top of the existing tax and isn't included in the product's price, increasing the final amount the customer pays. For example, if the initial tax is 30% and an extra 10% surcharge is applied, the total tax will increase to about 33%. 

Companies, like telecom, travel, and cable firms, often add surcharges to cover the cost of higher commodity prices, emergency services, or regulatory fees. A common example is the ATM surcharge applied by banks. This surcharge can be a fixed amount charged after each ATM transaction. 

By adding surcharges, companies pass the additional costs to the customers. These costs are stated separately from the original price. Surcharges are applied to various products and services across various industries, including government. 

In India, for instance, individuals earning over 1 crore annually pay a 10% surcharge, small corporations with a net income of 1 crore to 10 crores pay 5%, and those earning over 10 crores pay a 10% surcharge. Foreign corporations with a net income of 1 crore to 10 crores pay a 2% surcharge, and those earning over 10 crores pay a 5% surcharge. 

The Indian government offers some relief to domestic and foreign corporations exceeding the net income of 1 crore and 10 crores in surcharge application.