New Delhi: The government on Monday proposed higher taxes on the super-rich in the country in the Union Budget. They increased the surcharge on the super-rich having an annual income of over Rs 1 crore by three per cent to 15 per cent.
The finance minister Arun Jaitley proposed higher Dividend Distribution Tax (DDT) tax on those receiving dividend in excess of Rs 10 lakh per annum.
He also raised surcharge from 12 per cent to 15 per cent on persons having income above Rs 1 crore. “Dividend Distribution Tax (DDT) uniformly applies to all investors irrespective of their income slabs. This is perceived to distort the fairness and progressive nature of taxes.
Persons with relatively higher income can bear a higher tax cost. I, therefore, propose that in addition to DDT paid by the companies, tax at the rate of 10 per cent of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of Rs 10 lakh per annum,” said Mr Jaitley while unveiling Union Budget for 2016-17 on Monday.
Rate of Securities Transaction tax in case of ‘Options’ was proposed to be increased from .017 per cent to .05 per cent. Stock brokers have expressed disappointment over the increase in Securities Transaction Tax (STT) in Budget, saying the move could adversely impact equity volumes. “The STT increase in options is a substantial one. It will significantly impact the traders and limit the leeway to trade in options. Since it contributes significantly to the equity trading volume it will weigh in on the margins,” said IIFL president for retail broking Prasanth Prabhakaran
A surcharge of 10 per cent on taxable income of Rs 1 crore and above was imposed in 2013-14 by the then finance minister P Chidambaram.
In the last Budget, Mr Jaitley had abolished the wealth tax and replaced it with an additional surcharge of two per cent on the super-rich with a taxable income of over Rs 1 crore.
He also proposed to collect tax at source at the rate of one per cent on purchase of luxury cars exceeding value of Rs 10 lakh and purchase of goods and services in cash exceeding Rs two lakh.
“For compliant tax payers with resources, this levy not only advances collection of tax when the expenditure is incurred, but it provides data to the tax authorities to identify the persons who incur such expenditure, but may be missing from the tax base,” said Mr Jaitley. Farmers and notified class of persons will have an option of giving a form by which TCS will not be charged.
