The small number (by declared income) of very rich got somewhat poorer after the budget.
Continuing a post-reforms practice introduced in 2013 by Congress finance minister P Chidambaram of levying extra tax on the wealthy and for the fourth time since the Bharatiya Janata Party formed a government in 2014, Nirmala Sitharaman increased the 15% personal tax surcharge on top-end income brackets – for incomes between Rs 2 crore and Rs 5 crore, the new surcharge is 25%, and for incomes above Rs 5 crore, the new surcharge is 37%.
This will push up the maximum marginal rate to 39% for those earning between Rs 2 crore and Rs 5 crore, and for those with annual income over Rs 5 crore, the new maximum marginal rate is 42.74%. Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
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The extra tax outgo in absolute terms isn’t small. Someone earning Rs 3 crore a year (or Rs 25 lakh per month) will pay roughly Rs 76,375 more in tax per month. A taxpayer with an income of Rs 6 crore a year (or Rs 50 lakh a month) will have to shell out Rs 3.4 lakh extra every month.
Source: Economic Times
