However, the rich and super-rich will have to pay out quite a bit more, owing to a steep increase in surcharge. Here’s how it pans out:
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 will be even 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.
Spreading festive cheer with gold coins will be more expensive. Cost of a 10gm Swiss-imported gold coin is likely to jump Rs 900, with a price tag of about Rs 37,300. Increase in duty on gold, silver and platinum bars will also make jewellery purchases costlier.
20 Comments on this Story
Ram Dularay Verma396 days ago
Modi phase II government has, by out of budget provisions, made silent small savers and pensioners parking their money in banks and post offices poorer by reducing substantially interest rates on small saving deposits. Their purchasing power has gone down in big way. Government is dishonest. Nirmala ji gave huge benefits through income tax provisions to rich purchasers of electric car of which minimum costs is Rs. 11 lakhs. "SAB KA VIKAAS " poor being made poorer ,rich richer .
ggnngg12397 days ago
excellent move....OMG...on what deep and micro levels this Govt. thinks....great to be a part of rising India....i would be able to see India rising during my life time after so-so much of corruption, chaos and policies deterioration...very very much thankful to great people of India for voting for this Govt...Vande Matram
ppcabc2006397 days ago
More Tax means reducing purchasing power. Even if apparently, no Tax is hiked, but due to inflation, your purchasing power will reduce.Now, India is highly domestic oriented Economy and if purchasing power of Indians reduce, it will adversely affect Indian Economy.It is also true that without Tax income, it is not possible to develop infrastructure and various important projects. But Govt. in order to please poor, spends a large amount of money on subsidy. This does not make any return and bad investment.We must not forget that Greece Economy became Bankrupt due to such populist policy of Greece Govt. We must enhance purchasing power of poor by investing in Education so that poors become self reliant not giving them subsidy to make Economy bankrupt.