Budget 2013: Double whammy for the rich
Tax & Regulatory services
In order to raise resources for the development of the country, the finance minister has gone after those who are relatively well placed in the society.
The super rich in India will not only have to pay higher taxes on their earnings now, they will also shell out more for their Lamborghinis, Harleys and iPhones as P Chidambaram proposed to increase taxes on luxury cars, SUVs, super bikes, smartphones, yachts and expensive homes.
He didn’t even spare the cigar -- excise duty on cigarettes, cigars, cheroots and cigarillos has been increased to 18%.
Chidambaram has proposed a 10% surcharge for a year on income above `1 crore. Accordingly, a majority of super-rich people – 42,800 at last count -- would be coming under a higher tax slab. He expected affluent taxpayers to bear a small burden for one year cheerfully.
High-end stockmarket investors can expect a reduction in securities transaction tax. However, this benefit seems to be offset by introduction of commodities transaction tax.
A rich consumer will be hit in two ways. First on the income tax by paying surcharge of 10 %, second by the 25% extra duty on imported cars and also on SUVs if someone wants to buy one.
Although it was expected that the wealth tax burden should be reduced, nothing is done by FM on this front. However, affluent individuals can heave a sigh of relief since FM has not introduced the much expected inheritance tax.
Taxing the super-rich is in line with the model adopted by developed countries and would encourage channelling of investment in areas contributing to overall development.