Surcharge on Individuals

Nirmala Seetharam Said “I, therefore, propose to enhance surcharge on individuals having taxable income from 2 crore to 5 crore and 5 crore and above so that effective tax rates for these two categories will increase by around 3 % and 7 % respectively.”

Extract of Finance Bill

In the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, being a non-resident, calculated,

  • At the rate of ten per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees.
  • At the rate of fifteen per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed two crore rupees.
  • At the rate of twenty-five per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds two crore rupees but does not exceed five crore rupees.
  • At the rate of thirty-seven per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds five crore rupees.
Slab In crores Particulars Income Tax considering Finance bill- with new surcharge Computation as per old surcharge
2 to 5 3,00,00,000 1,14,56,250 1,05,39,750
Effective Tax 38.1875% 35.1325%
Change in Effective Tax 3.055%
5 to 10 7,00,00,000 2,96,53,650 2,48,91,750
Effective Tax 42.362357% 35.559643%
Change in Effective Tax 6.8027143%

Conclusion

3% and 7% is effective change in rate of tax and not the change in the surcharge.

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