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Budget 2019: Effective tax rate for super rich to go up to 42.74%

Budget 2019-20: Currently. for those with income above Rs 50 lakh, there is an additional payout in the form of a surcharge.

Budget 2019: Effective tax rate for super rich to go up to 42.74%
Budget 2019 India: As of now, for net income more than Rs 1 crore, a Surcharge of 15 per cent on the amount of income tax is to be levied.

Union Budget 2019 India: Union Minister of Finance Nirmala Sitharaman in her Budget 2019 speech has proposed to tax the super rich further. In her speech, she has proposed a higher surcharge for income category falling between Rs 2 crore and Rs 5 crore and for those earning above Rs 5 crore. The effective tax rate for them will increase by 3.12 per cent and 6.86 per cent, respectively.

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Currently. for those with income above Rs 50 lakh, there is an additional payout in the form of a surcharge. If net income is more than Rs 50 lakh but less than Rs 1 crore, a Surcharge of 10 per cent on the amount of income tax is to be levied. For net income more than Rs 1 crore, a Surcharge of 15 per cent on the amount of income tax is to be levied. In such cases, the Health and Education cess of 4 per cent will be levied on the amount of income tax plus surcharge.

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“There is no change in tax slabs. Instead, the surcharge has increased from the current rate of 15% to 25% on the income slab falling under Rs 2 Cr – Rs 5 Cr and from the current 15% to 37% on the income falling above Rs 5 Cr. This will impact high income tax payers as the surcharge so levied will increase the current tax rates for such individuals from 35.88% to 39% and 42.74%, respectively. This means an additional tax burden for such categories of income tax payers by 3.12% and 6.86%, respectively,” says Poorva Prakash, Senior Director, Deloitte India.

Income Tax Calculator: Know post-Budget 2019 Income Tax out go here

As of now the Health and Education Cess of 4 per cent is levied on the income tax that makes the effective tax rates to become 5.2 per cent, 20.8 per cent and 31.2 per cent for the 5 per cent, 20 per cent and 30 per cent tax rates respectively.

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First published on: 05-07-2019 at 13:36 IST