Taxing times ahead for super-rich
NEW DELHI: The government is gearing up for an overhaul of India’s tax
regime by widening the “super-rich” net, rejiging existing slabs and
introducing wealth tax on expensive watches, paintings and other works
of art.
An additional tax of 10% is also proposed if annual earnings from dividends on mutual funds and equities exceed Rs1 crore. These are among a slew of proposals included in the new direct taxes code (DTC) bill that the government, struggling with an ever widening current account deficit, plans to introduce in Parliament’s ongoing monsoon session.
“To maintain overall progressivity in levy of income tax, a fourth income tax slab is also proposed,” a senior officer, who did not wish to be identified told HT. At present, there are three tax slabs. Those with an income of less than Rs2 lakh a year are exempt from paying taxes. Those earning between Rs2 lakh and R5 lakh annually are taxed at 10%, those between Rs5 lakh and R10 lakh at 20% while anybody earning more than Rs10 lakh pays a tax of 30%.
The bill, which has been in the works for many years, also proposes to rearrange these slabs, sources said.
An additional tax of 10% is also proposed if annual earnings from dividends on mutual funds and equities exceed Rs1 crore. These are among a slew of proposals included in the new direct taxes code (DTC) bill that the government, struggling with an ever widening current account deficit, plans to introduce in Parliament’s ongoing monsoon session.
“To maintain overall progressivity in levy of income tax, a fourth income tax slab is also proposed,” a senior officer, who did not wish to be identified told HT. At present, there are three tax slabs. Those with an income of less than Rs2 lakh a year are exempt from paying taxes. Those earning between Rs2 lakh and R5 lakh annually are taxed at 10%, those between Rs5 lakh and R10 lakh at 20% while anybody earning more than Rs10 lakh pays a tax of 30%.
The bill, which has been in the works for many years, also proposes to rearrange these slabs, sources said.
In addition, in this year’s budget finance minister P Chidambaram,
for the first time, introduced a “super-rich tax”. “Relatively
prosperous” persons with a taxable income of more than Rs1 crore — and
there are supposedly only 42,800 of them in India — now pay an
additional surcharge of 10%.
The government plans to introduce a higher tax slab for those with an annual income above a certain threshold, sources said. Those with an annual income of R50 lakh may be included in the “super-rich” club.
The scope of assets to be included in “net wealth” will be widened to include watches that cost more than Rs50,000, archaeological collections -– statues, coins or other artefacts-- paintings, sculptures or any other work of art and bank deposits outside India. Cash-inhand limit, which is Rs50,000, will be raised to more than Rs2 lakh to be part of “net wealth”.
Wealth tax at the rate of 0.5% if the total value of such assets is between Rs5-20 crore and 1% if it is higher than Rs20 crore — up from the existing limit of Rs30 lakh at the rate of 1% -- is being planned.
The bill also redefines income from property which could make letting out houses for commercial purposes more taxing.
The government plans to introduce a higher tax slab for those with an annual income above a certain threshold, sources said. Those with an annual income of R50 lakh may be included in the “super-rich” club.
The scope of assets to be included in “net wealth” will be widened to include watches that cost more than Rs50,000, archaeological collections -– statues, coins or other artefacts-- paintings, sculptures or any other work of art and bank deposits outside India. Cash-inhand limit, which is Rs50,000, will be raised to more than Rs2 lakh to be part of “net wealth”.
Wealth tax at the rate of 0.5% if the total value of such assets is between Rs5-20 crore and 1% if it is higher than Rs20 crore — up from the existing limit of Rs30 lakh at the rate of 1% -- is being planned.
The bill also redefines income from property which could make letting out houses for commercial purposes more taxing.
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