There are 410,000 people with income above Rs. 20 lakh. However, no public data are available for those in the Rs. 1- crore- plus bracket. Finance ministry officials said to levy a tax on the super rich, it was important to first define the term. The government is cautious the threshold is not so high that the tax department gets little revenue boost or so low that it hurts a large chunk of the taxpayer base.
A leading industrialist and his assistant pay the same tax,” said an official, asking not to be named. Also, in a pre- Budget meeting with Finance Minister P Chidambaram, an economist is learnt to have complained he and one of the richest business tycoons in the country were paying tax at the same rate. A surcharge is an additional levy on a tax an individual pays. For example, if the tax on an income of Rs. 1 crore is Rs. 30 lakh and a surcharge of 10 per cent is levied, the total tax liability on the taxpayer would be Rs. 33 lakh.
The ministry might not tinker with the existing I-T slabs. It fears raising the exemption limit from the current Rs. 2 lakh would take many people out of the tax net, besides implying a higher exemption for all taxpayers and higher revenue loss for the government. Currently, tax is levied at 10 per cent on annual income between Rs. 2 lakh and 5 lakh, and at 20 per cent between Rs. 5 lakh and 10 lakh. Income above Rs. 10 lakh is taxed at 30 per cent.
A tax on the super- rich with income over Rs. 1 crore might not add much to the government’s revenues, but it would send a signal that it is looking to protect the poor and tax the rich. Though most of India Inc has opposed tax on the superrich at a higher rate, Wipro Chairman Azim Premji recently supported it, saying it sounded aright political move. Prime Minister’s Economic Advisory Council Chairman C Rangarajan had also said a surcharge should be added for income above a particular level.