I am a little about this income tax surcharge rates in the Union Budget of 2019.How will it be calculated for higher income groups.
Answer
Answer
Surcharge is charged on the individuals who have a taxable of more than Rs.50 lakhs. This existed in two slabs prior to this budget. Till last year, the surcharge was charged at 10% for income above Rs.50 lakh and up to Rs.1 crore. For income above Rs.1 crore, the surcharge was to be charged at 15%. In the current budget, there are two additional slabs that have been introduced. People earning above Rs.2 crore and up to Rs.5 crore will now pay a surcharge of 25% while those earning above Rs.5 crore per year will now pay a surcharge of 37%. The table will help you understand the new surcharge calculation clearly. The Cess will continue to apply on all income slabs at 4%. Check the table below.
Income Slab
Tax Rate
Surcharge
Cess
Effective Tax Rate
Rs.50 l to Rs.1 cr
30%
10%
4%
34.32%
Rs.1 cr to Rs.2 cr
30%
15%
4%
35.88%
Rs.2 cr to Rs.5 cr
30%
25%
4%
39.00%
Above Rs.5 cr
30%
37%
4%
42.74%
As you can see from the above table, the tax liability of persons earning above Rs.2 crore and above Rs.5 crore has gone up substantially after this budget.