Current highest rate of applicable income tax rate is 35.88%
Surcharge which is charged over and above the tax amount has been increased for those earning above ₹2 crore
Super-rich will have to contribute more towards tax collection. Surcharge which is charged over and above the tax amount has been increased for those earning above ₹2 crore. Going forward those earning between ₹2 crore and ₹5 crore will have to pay 25% surcharge on the tax amount, whereas those earning over ₹5 crore will have to pay 37% as surcharge on tax amount, till now they were paying 15% as surcharge. The surcharge will be subject to marginal relief to ensure that the surcharge payable is not in excess of the income that exceeds the threshold.
So in total there will be four surcharge slab and rates, beside the above mentioned two new rates, the existing rates are—10% for those with total income between ₹50 lakh and ₹1 crore, 15% for those with taxable income between ₹1 crore and ₹2 crore.
Current highest rate of applicable income tax rate is 35.88% after factoring in the surcharge and for those with incomes over ₹2 crore this is set to increase. As per the finance minister, the new surcharge rate will increase effective income tax rate by 3% and 7% for those earning between ₹2 crore to ₹5 crore and those earning above ₹5 crore, respectively. Therefore effective tax rate will now be 39% and 42.74%, respectively for two segments of incomes.
According to income tax department, as on March 2019 above 2 lakh individuals filed income tax return having income within the range of ₹50 lakh and ₹1 crore, whereas above 1 lakh individual filed return with income above ₹1 crore.