Individuals earning more than Rs 5 crore in India have to pay a 42.7% income tax, much higher than the tax imposed by other developing countries.
Key Highlights:-
Individuals having a taxable income of more than Rs 50 lakh have to pay surcharge on top of 30% tax and 4% cess.
The total tax incidence comes to 42.7% for individuals earning more than Rs 5 crore.
According to tax experts, the highest tax slab of 42.7% in India is much higher than the tax rate applicable to super-rich in other countries.
New Delhi:- As Finance Minister Nirmala Sitharaman gears up to present her second Union Budget on February 1, 2019, expectations for a reduction in personal income tax rates have gone up as experts believe tax slabs in India are much higher than other developing countries especially the tax on the super-rich. The Direct Tax Code (DTC) has also suggested a rejig in income tax rates.
In India, currently, income up to Rs 2.5 lakh is exempt from income tax and income between Rs 2.5 lakh to Rs 5 lakh is taxed at 5%. Income from Rs 5 lakh to Rs 10 lakh is taxed at 20% while income above Rs 10 lakh is taxed at 30%. Also, taxpayers have to pay an additional 4% health and education cess on the tax amount.
However, individuals having a taxable income of more than Rs 50 lakh have to pay surcharge on top of the above-mentioned tax and cess. If net income exceeds Rs 50 lakh but does not exceed Rs 1 crore then a surcharge of 10% will be applicable. Individuals having a net income of more than Rs 1 crore and less than Rs 2 crore will have to pay 15% surcharge while a surcharge of 25% will be applicable on net income of more than Rs 2 crore and less than Rs 5 crore. If an individual's net income exceeds Rs 5 crore, then he/she has to pay 37% surcharge on the above-mentioned income tax. So, the total tax incidence comes to 42.7% for individuals earning more than Rs 5 crore.
According to tax experts, the highest tax slab of 42.7% in India is much higher than the tax rate applicable to super-rich in other countries. According to Deloitte, in the US, the highest tax slab is 37% while in Singapore and Hong Kong it is 22% and 17% respectively. Even other developing countries like Thailand (35%), Malaysia (28%) and Brazil (27.5%) impose a lower tax on super-rich compared to India.
Countries Highest Tax Rates (in %)
India 42.7
USA 37
UK - England/Wales/Northern Ireland 45
Singapore 22
Hong Kong 17
China 45
Australia 45
Brazil 27.5
Malaysia 28
France 45
Germany 45
Thailand 35
Source: Deloitte
Experts believe such a high rate on the super-rich will discourage them to show their actual income and lead to lower tax collections.
Key Highlights:-
Individuals having a taxable income of more than Rs 50 lakh have to pay surcharge on top of 30% tax and 4% cess.
The total tax incidence comes to 42.7% for individuals earning more than Rs 5 crore.
According to tax experts, the highest tax slab of 42.7% in India is much higher than the tax rate applicable to super-rich in other countries.
New Delhi:- As Finance Minister Nirmala Sitharaman gears up to present her second Union Budget on February 1, 2019, expectations for a reduction in personal income tax rates have gone up as experts believe tax slabs in India are much higher than other developing countries especially the tax on the super-rich. The Direct Tax Code (DTC) has also suggested a rejig in income tax rates.
In India, currently, income up to Rs 2.5 lakh is exempt from income tax and income between Rs 2.5 lakh to Rs 5 lakh is taxed at 5%. Income from Rs 5 lakh to Rs 10 lakh is taxed at 20% while income above Rs 10 lakh is taxed at 30%. Also, taxpayers have to pay an additional 4% health and education cess on the tax amount.
However, individuals having a taxable income of more than Rs 50 lakh have to pay surcharge on top of the above-mentioned tax and cess. If net income exceeds Rs 50 lakh but does not exceed Rs 1 crore then a surcharge of 10% will be applicable. Individuals having a net income of more than Rs 1 crore and less than Rs 2 crore will have to pay 15% surcharge while a surcharge of 25% will be applicable on net income of more than Rs 2 crore and less than Rs 5 crore. If an individual's net income exceeds Rs 5 crore, then he/she has to pay 37% surcharge on the above-mentioned income tax. So, the total tax incidence comes to 42.7% for individuals earning more than Rs 5 crore.
According to tax experts, the highest tax slab of 42.7% in India is much higher than the tax rate applicable to super-rich in other countries. According to Deloitte, in the US, the highest tax slab is 37% while in Singapore and Hong Kong it is 22% and 17% respectively. Even other developing countries like Thailand (35%), Malaysia (28%) and Brazil (27.5%) impose a lower tax on super-rich compared to India.
Countries Highest Tax Rates (in %)
India 42.7
USA 37
UK - England/Wales/Northern Ireland 45
Singapore 22
Hong Kong 17
China 45
Australia 45
Brazil 27.5
Malaysia 28
France 45
Germany 45
Thailand 35
Source: Deloitte
Experts believe such a high rate on the super-rich will discourage them to show their actual income and lead to lower tax collections.
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