The government also decided to continue a 5 per cent surcharge on domestic companies with total annual income of more than Rs 1 crore but less than Rs 10 crore. Those with income exceeding Rs 10 crore will pay a surcharge of 10 per cent.
As per the Finance Bill 2014, the surcharge on rich individuals has been continued for one more year, until March 2015. The surcharge will apply to individuals, Hindu undivided families, firms and entities with similar tax status.
The surcharge was imposed in the 2013-14 budget and was earlier scheduled to expire on March 31, 2014.
Chidambaram had expressed anguish that only 42,800 people claimed to have an annual income of over Rs 1 crore.
The super-rich were not expecting continuation of the levy, but the government seemingly decided to continue with it in the next financial year with the aim of getting additional revenue, KPMG Director taxation Vineet Agarwal said.
In the case of foreign companies, the surchage will be at the rate of 2 per cent where total annual income is between Rs 1 crore and Rs 10 crore and 5 per cent where income exceeds Rs 10 crore.
While imposing the surchage in the 2013-14 budget, Chidambaram had said fiscal consolidation cannot be effected only by cutting expenditure.
"Wherever possible, revenue must also be augmented," he said in the February 28, 2013, budget speech.
Later in a post budget briefing, Chidambaram explained the process of amendments to the Finance Bill in reference to the tax surcharge on super rich and corporates and said the new government "ought to be amended" the part-3 of the bill and "it will be amended when regular budget is presented".
He further said that "all the chartered accountants understand it, all the tax consultants under it. Advance tax first instalment is payable on June 15 (and) before that there will be a government and there will be a regular budget".