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Putting an end to speculation, Finance Minister P Chidambaram has retained the 10 per cent surcharge on those earning over Rs 1 crore annually.
The Government also decided to continue a 5 per cent surcharge on domestic companies with total annual income of more than Rs 1 crore but less than Rs 10 crore. Those with income exceeding Rs 10 crore will pay a surcharge of 10 per cent.
As per the Finance Bill 2014, the surcharge on rich individuals will continue for one more year, until March 2015. The surcharge will apply to individuals, Hindu undivided families, firms and entities with similar tax status.
The surcharge was imposed in the 2013-14 Budget and was earlier scheduled to expire on March 31, 2014.
Chidambaram had expressed anguish that only 42,800 people claimed to have an annual income of over Rs 1 crore.
The super-rich were not expecting continuation of the levy, but the Government seemingly decided to continue with it in the next financial year with the aim of getting additional revenue, KPMG Director-Taxation Vineet Agarwal said.
In the case of foreign companies, the surcharge will be at the rate of 2 per cent where the total annual income is between Rs 1 crore and Rs 10 crore and 5 per cent where the income exceeds Rs 10 crore.
While imposing the surcharge in the 2013-14 budget, Chidambaram had said fiscal consolidation cannot be effected only by cutting expenditure.
“Wherever possible, revenue must also be augmented,” he said in the February 28, 2013, budget speech.
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