New Delhi: India's super rich would have to now pay higher taxes, with the Union Budget proposing to raise the surcharge levied on them. Presenting her maiden Union Budget, Union Finance Minister Nirmala Sitharaman on Friday announced raising of surcharge by 3% on individuals having taxable income between Rs 2 crore and Rs 5 crore. The increase is 7% for those with taxable income of Rs 5 crore and more.As a result of increase in surcharge, the effective tax rate for people earning between Rs 2 and Rs 5 crore would be 39%, as against 35.8% now. For those with more than Rs 5 crore taxable income, the new effective rate would be 42.74%.
"...The ideology of taxing the super-rich continues to be carried out with increase of surcharge on individuals earning more than Rs 2 crore," said Nitin Baijal, Director, Deloitte India.The move would hit top CEOs of big firms, expatriates, businessmen and traders. Sitharaman said that the higher surcharge had been proposed in view of rising income, and that the high income earners should contribute more to the nation's development. The business community clearly seemed miffed over the proposal to raise the surcharge.
"We believe that though the surcharge on people earning a higher income is on the negative part, it would be needed to fund some of the government schemes," said property tycoon Niranjan Hiranandani.
CORPORATE TAX: The FM has also levied a lower rate of 25% corporate tax on all companies with annual turnover up to Rs 400 crore. However, 0.7% big companies still fall outside this lower tax ambit. This is the year when former finance minister Arun Jaitley’s four-year roadmap of corporate tax cut comes to an end.
