However, the rich and super-rich were hit. They ended up paying quite a bit more, owing to a steep increase in surcharge. Here’s what happened in last Budget:
For those with taxable income of Rs 2-5 crore, the surcharge stands increased from 15% to 25%, which means an effective tax rate of 39% as opposed to 35.9%. An increase of close to 3 percentage points means a taxpayer with taxable income of Rs 2.50 crore will now have to pay tax of Rs 95.06 lakh as against a tax of Rs 87.45 lakh earlier. This means a higher outgo of Rs 7.60 lakh.
Contribution towards nation-building was higher for those with taxable income above Rs 5 crore. The increase in surcharge from 15% to 37% — a whopping 22 percentage points — translates into a 7% higher effective tax rate of 42.7%. To illustrate, with a taxable income of Rs 5.50 crore, a taxpayer will now pay Rs 2.32 crore as opposed to Rs 1.95 crore earlier. This means a higher outgo of Rs 37.32 lakh.
When buying luxury flats, the sale consideration typically included payments for amenities like car parking and club membership. For tax deduction purposes, the budget now specifies that 1% TDS will apply on the gross consideration, including such amenities, and not just the price of the flat. Failure to disclose the entire amount could invite penalties.
Those buying affordable housing can save some tax. Interest on a loan taken by a first-time buyer to purchase a house valued up to Rs 45 lakh will qualify for additional deduction of up to Rs 1.5 lakh, raising the total deduction available from Rs 2 lakh to Rs 3.5 lakh, for a self-occupied house.
What about indirect taxes? Do they pinch your pocket less? Largely no. With an emphasis on “Make in India”, customs duties have been increased across a wide spectrum. If you wish to beat the heat by installing an imported air-conditioner, a 2-tonne split AC will now cost about Rs 82,500 – a hike of Rs 7,500.
Gold coins became more expensive. Cost of a 10gm Swiss-imported gold coin jumped to Rs 900, with a price tag of about Rs 37,300. Increase in duty on gold, silver and platinum bars made jewellery purchases costlier.
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