To Give Money to Salaried, FM Dips into Pock­ets of Rich

10% sur­charge on tax on in­comes be­tween 50 L and 1 cr to com­pen­sate for 12,500 re­bate for all

The Economic Times - - Front Page -

New Delhi: What the gov­ern­ment gives one, it takes away from an­other — the af­flu­ent in this in­stance. To com­pen­sate for largesse to salaried earn­ers at the lower end,a10%sur­chargeis­beingim­pose­don tax on in­comes be­tween ₹ 50 lakh and ₹ 1 crore. Some­one with an an­nual tax­able in­come of ₹ 60 lakh will pay about ₹ 1.55 lakh more in tax. About 1.5 lakh peo­ple fall into this, now seem­ingly broader, cat­e­gory of af­flu­ent tax­pay­ers.

Tax pro­fes­sion­als said the new sur­charge was nec­es­sary to off­set rev­enue fore­gone by the ₹ 12,500 re­bate ex­tended to all tax­pay­ers. Left un­changed is the 15% sur­charge on tax for an­nual in­comes over ₹ 1 crore. In fact, tax­pay­ers in that bracket will ac­tu­ally save about ₹ 14,000 due to the re­bate (as the sur­charge will be pro­por­tion­ately re­duced).

Fi­nance min­is­ter Arun Jait­ley stuck to the tenets of fis­cal pru­dence, said Sonu Iyer of EY, hav­ing halved tax on in­comes of ₹ 2.5-5 lakh to 5%. The min­is­ter made the point in his Bud­get speech that only 24 lakh peo­ple show an an­nual in­come ex­ceed­ing ₹ 10 lakh, though more than 12.5 mil­lion cars were sold in the past five years and over 20 mil­lion In­di­ans went abroad in 2015.

“From all these fig­ures, we can con­clude that we are largely a tax non­com­pli­ant so­ci­ety. When too many peo­ple evade taxes, the bur­den of their share falls on those who are Im­pact On Up­per Crust Tax­pay­ers

EX­IST­ING TAX AF­TER BUD­GET

TAX OUTGO

honest and com­pli­ant,” he said.

The sur­charge for in­comes above ₹ 1 crore was first in­tro­duced as a one-time mea­sure i n 2 0 1 3 by then FM P Chi­dambaram and was sub­se­quently ex­tended. It started at 10%, was raised to 12% in 2015 and to 15% a year later.

The Bud­get is less kind to top tax­pay­ers in other ways too. It caps the tax ben­e­fit on home loans if the prop­erty has been rented out, bring­ing it on a par with the ben­e­fit for self-oc­cu­pied prop­erty un­der Sec­tion 24. “At an in­come of ₹ 60-70 lakh, an ad­di­tional tax of ₹ 1.5 lakh will not make a big dif­fer­ence. But cap­ping the tax ben­e­fits on sec­ond houses and prop­erty given out on rent will be quite dis­com­fort­ing,” said Amit Ma­hesh­wari, ma n a g i n g p a r t n e r of Ashok Ma­hesh­wary and As­so­ciates. The good news is that there is no change in the rules for long-term cap­i­tal gains from eq­uity and eq­uity funds. It had been spec­u­lated that the Bud­get would ex­tend the min­i­mum hold­ing pe­riod from one year to two-three years.

60 LAKH 1.1 CR

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