Sinha: Surcharge on super-rich fine
the super-rich, he said: “I would any day place more emphasis on compliance than merely increasing tax rates... If you increase the tax rates, then the same people who are already in the tax net will end up paying more and it will become a powerful disincentive for paying taxes.” He, however, suggested that a surcharge — say, 10% — on people with taxable income of above R50 lakh or R1 crore a year might be a doable option, as it would not amount to tweaking the rates. “So if he (the finance minister) imposes a surcharge on the rich after a certain cut-off, then I won’t disagree.” A surcharge is essentially a tax on tax.
Finance minister P Chidambaram recently gave credence to the idea of increasing the tax on the super-rich a bit to address the fall in revenue buoyancy, saying that the “argument was worth considering”. FE had earlier reported on the finance ministry’s plan to have a surcharge for a defined category of super-rich taxpayers and an idea doing the rounds in the ministry to tax the dividend income beyond a certain threshold, say, R20 lakh, in the hands of the receiver also at the same rate as it is taxed at the giver’s end.
Currently, companies pay 15% dividend distribution tax but the dividend is tax-free in the receiver’s hands. If the proposal is cleared, the new impost would be levied only sparingly so that it impacts only the really affluent like promoters of large
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