BackInterim budget: 10% surcharge on super rich retained until the new budget
The Finance Bill, 2013, had increased the tax liability of the rich by levying a surcharge of 10% on taxable income that exceeds `1 crore
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The Finance Bill, 2014, introduced in the interim budget session on Monday retains the surcharge on the super-rich. The Finance Bill, 2013, presented last year had increased the tax liability of the rich by levying a surcharge of 10% on taxable income that exceeds ₹ 1 crore. This one-time surcharge, was applicable only for the assessment year 2014-2015, and was in addition to the education cess of 3% that is paid on total income tax.
However, the surcharge and income tax rates will continue for the purpose of deduction of tax at source from salaries during the financial year 2014-15, and for computing the “advance tax" payable during that financial year on current incomes. “Practically the income tax rates including surcharge will apply for tax withholding or payment of advance tax. For salaried individuals who pay taxes every month, they will have to pay this surcharge till the time new government drops the surcharge. But for non-salaried individuals who pay advance tax only in September, they may not have to pay the additional surcharge at all if the new government decides to drop it," says Kuldip Kumar, executive director, PwC India.
The impact of surcharge comes with a marginal relief. According to the Bill, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of ₹ 1 crore by more than the amount of income that exceeds ₹ 1 crore. This means that the surcharge can’t be in excess of the income that exceeds ₹ 1 crore. For instance, the tax liability on a taxable income of ₹ 1 crore is around ₹ 29 lakh. So if a person has a taxable income of ₹ 1,00,00,010, his total tax liability will not increase by ₹ 2.9 lakh but by ₹ 10.
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