|Chennai||Rs. 27770.00 (-0.14%)|
|Mumbai||Rs. 29200.00 (2.31%)|
|Delhi||Rs. 27900.00 (-0.36%)|
|Kolkata||Rs. 28270.00 (1%)|
|Kerala||Rs. 27050.00 (-0.37%)|
|Bangalore||Rs. 27550.00 (1.66%)|
|Hyderabad||Rs. 27770.00 (-0.14%)|
The government might impose a surcharge on income tax on the "super rich"; and, an option being considered is bringing individuals with taxable income of over Rs 1 crore within its ambit.
The government is undertaking an exercise to find out how much tax could be collected if a surcharge is imposed on various thresholds of taxable income - from over Rs 50 lakh to over Rs 1 crore. There are over 400,000 individuals in the country with taxable incomes beyond Rs 20 lakh. However, there is no public data available for those in the Rs 1-crore-plus bracket.
Finance ministry officials said, in order to levy a tax on super rich, it was important to first define "super rich". The government is cautious that the threshold is not so high that the tax department gets little revenue boost, or so low that it hurts a large chunk of the taxpayer base.
"We have to see how to define the super rich. A leading industrialist in the country and his assistant pay the same tax," said an official, asking not to be named.
A surcharge is an additional levy on the tax that an individual pays. For example, if the tax on an income of Rs 1 crore is Rs 30 lakh and a surcharge of 10 per cent is levied, the total tax liability on the taxpayer would be Rs 33 lakh.
The finance ministry might not tinker much with the existing income tax slabs. It fears raising the exemption limit from Rs 2 lakh at present would not just take many people out of the tax net, but would also imply a higher income-tax exemption for all taxpayers and higher revenue loss for the government.
Currently, tax is levied at 10 per cent on income between Rs 2 lakh and 5 lakh, and at 20 per cent on that between Rs 5 lakh and 10 lakh. Income above Rs 10 lakh is taxed at 30 per cent. In 2011-12, about 29 million taxpayers paid tax of Rs 15,010 crore in Rs 0-5 lakh slab. They comprised 89 per cent of the total taxpayer base but their contribution was only about 10 per cent of the total tax collection. About 63 per cent of the total tax was collected from 1.3 per cent taxpayers with income above Rs 20 lakh.
A tax on the super rich with income above Rs 1 crore might not add much to the government's revenue kitty, but it would send a signal that it is looking at protecting the poor and taxing the rich. In a pre-Budget meeting with Finance Minister P Chidambaram, an economist is learnt to have complained that he and one of the richest business tycoons in the country were paying tax at the same rate.
Though most of India Inc is opposing the tax on super rich, Wipro Chairman Azim Premji recently supported the idea, saying it sounded a right political move. Prime Minister's Economic Advisory Chairman C Rangarajan had also said a surcharge should be added for income above a particular level.
The finance minister himself had told a TV channel that the argument that very-rich should be asked to a pay a little more should be considered.