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 per cent on individuals having taxable income from Rs 2 crore to Rs 5 crore. The increase is 7 per cent 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 from Rs 2 to Rs 5 crore would be 39 per cent from 35.8 per cent now. For those with more than Rs 5 crore taxable income, the new effective rate would be 42.74 per cent.
“…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.
“I, therefore, propose to enhance surcharge on individuals having taxable income from Rs 2 crore to Rs 5 crore and Rs 5 crore and above so that effective tax rates for these two categories will increase by around 3 per cent and 7 per cent respectively,” she said, while presenting the Budget.
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.