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.
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.
Watch FE Explained video: What is Union Budget?
“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.
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.