Finance minister Arun Jaitley on Monday proposed to raise the surcharge on all individuals with a taxable income of Rs 1 crore per annum -- popularly called the super-rich -- by three percentage points to 15%.
Companies, too, with incomes between Rs 1 crore and Rs 10 crore would have to now pay a surcharge of 15%.
“ I also propose to raise the surcharge from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs 1 crore,” Jaitley said in his budget speech.
This will be applicable to individuals, Hindu Undivided Families, and “entities with similar tax status.”
Jaitley has raised the super-rich surcharge twice since last year -- from 10% to 12% in 2015 and a similar hike this year.
Although the finance minister has kept the income-tax slabs unchanged, the super-rich surcharge may well be defined as an additional slab.
The effective peak income tax rate in India will now rise from 34.61% to 35.54%.
Former finance minister P Chidambaram had first announced a surcharge of 10% in 2013 for individuals with annual incomes of Rs 1 crore and above. According to estimates, 42,800 people came in this category in 2013.
Latest estimates of people earning more than Rs 1 crore have not been disclosed yet.
According to finance ministry estimates, 89% of India’s total estimated 35-million taxpayers have a taxable income of less than Rs 5 lakh. An estimated 5.5% of taxpayers have an income of between Rs 5 lakh and Rs 10 lakh, 4.3% earn between Rs 10 and Rs 20 lakh, and only 1.3% have annual taxable income of more than Rs 20 lakh.