The rich aren't really upset with this Budget

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.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. 70100478 Those affected, however, make for a small percentage of 1.3 billion Indians. As per income tax data, of 46.6 million returns filed in 2016-17, only 74,983 individuals (or 0.16%) reported gross incomes between Rs 1 crore and Rs 5 crore. A good number of these will be taxpayers earning below Rs 2 crore. So they aren’t affected by the budget’s new rates.Comparable to Other NationsOnly 6,361 individuals declared incomes of over Rs 5 crore.But over the years, finance ministers have been levying extra tax on this small group. After the 10% surcharge on incomes above Rs 1 crore imposed by Chidambaram in 2013, the BJP government increased the surcharge twice – in 2015, the surcharge for income above Rs 1 crore was hiked to 12%, and in 2016, it was raised to 15%. In 2017, incomes above Rs 50 lakh were slapped with a surcharge of 10%.Though the maximum marginal rate of 42.74% tax appears high, it is comparable to the highest tax rates in some other countries. In Germany, the UK, Japan and China, 45% tax rate applies to incomes much below Rs 5 crore annually (taking the current rupee-dollar exchange rate). For example, 45% rate applies to income of Rs 2.04 crore in Germany and Rs 2.53 crore in Japan. In the US, for single tax filers, the top tax rate is 37% for income over Rs 3.42 crore.

from Economic Times https://ift.tt/2FWbnVk