Vote on Account 2014: P Chidambaram retains 10% tax surcharge on super rich
February, 18th 2014
The finance minister has retained the super rich surcharge for now, but held out hope that it would be dropped when the new government presents the full budget a few months from now. Last year, Chidambaram had imposed 10% surcharge on those with taxable income in excess of Rs1 crore and said it would be in force only for a year.
But the surcharge has been retained for now as the finance minister has chosen to follow the convention of outgoing governments not tinkering with direct taxes and surcharges in interim budgets.
If the new government drops the surcharge, those earning more than Rs 1 crore would not have to shell out the extra amount in 2014-15 and would be eligible for a refund for the additional tax paid. There are 42,800 tax payers whose annual income is more than Rs 1 crore.
Tax experts said they were not expecting the surcharge to go in the interim budget. "In his vision for the future, the FM could have indicated what the government's view is on the future of these surcharges. He could have stated his intent," said Sudhir Kapadia, national tax leader, EY. The temporary increase in surcharge on dividend distribution tax to 10% from 5% also stays till the new government takes a call on it, as does the surcharge on corporate income of small companies.
Local companies with a total annual income of more than Rs 1 crore but less than Rs 10 crore were asked last year to pay a surcharge of 5% and those earning more than Rs 10 crore, a 10% surcharge. Foreign companies were slapped with a 5% surcharge instead of 2% earlier.