Surcharge | Meaning and Definition

What does surcharge mean?

A surcharge is an additional fee that is added to the price of a product or any service. It is actually added to the current tax, but it will not really be included in the price of the product or service. And because it is based on tax payable rather than income generated, it is also referred to as a tax on tax in the context of income tax. It is an added cost on income tax that is paid by taxpayers with a higher income in a certain fiscal year. Individuals, corporations, as well as companies can also apply for minor relief to avoid paying the surcharge.

How is a surcharge characterized?

A surcharge is often characterized as a checkout fee in the context of payment systems. When a merchant accepts payment by check, credit card, charge card, or debit card, they impose an additional fee. The amount is sufficient to cover the expense to the merchant of receiving that method of payment, such as a credit card company, as well as the bank’s merchant service fee.