The much anticipated tax on the super rich finally made its entry as a very soft one. Finance Minister has set a relatively very high exemption limit of Rs 1 crore for the super rich. The outcome is that there is only 48200 super rich people in the country. Remember that the total estimated black money in the country is Rs 25 lakh crore two years ago.
Implication of the 10 surcharge on the super rich is that the total tax liability on the super rich is 33.99% (comprising 30% basic tax rate plus 3% super rich surcharge plus 3% educational cess). Obviously, the additional revenue realization of this surcharge is meager because of the low tax base (only 48000 people). Preliminary estimates indicate that the total tax from the super rich tax may not cross even Rs 2000 crores.
But a lower exemption limit of say, 10 lakh would have fetched healthy revenue in this difficult time for the government. Without such a step, the super rich tax remains an ornamental one.
The net result of the newly introduced surcharge on the super rich thus is not revenue, but the image that the government is very progressive on the taxation front.
Government expects a total of 13300 crores as additional tax revenue from direct taxes. This is including the increased surcharge on corporate income. Hence the conclusion is that revenue from the much hyped tax on the super rich is so meager compared to the real potential.
