Budget 2019 : Tax Rates
While most economists had anticipated that the government might impose an inheritance tax on the super-rich, the government has not decided to follow through this time and has instead the tax on the rich taxpayers.
What has changed?
- No change has been been made to the existing tax slabs.
- A surcharge of 25% of tax has been imposed on those having income between 2-5 crore.
- Under the new tax regime, those with income between Rs 2 crore and 5 crores will have to a tax at the rate of 39%.
- For those having income greater than 5 crores, the tax surcharge is 37%.
- Those earning more than 5 crores will have to pay a tax of 42.74%.
- The existing health and education cess (4%) will be continued to impose on the total tax amount, including the surcharge.
- All changes made in the interim budget like no tax for people with incomes till 5 lakh and an increase in standard deduction till Rs 50,000 have been carried forward in the budget.
What is the inheritance tax?
An inheritance tax is a tax paid by a person who inherits money or property of a person who has died, whereas an estate tax is a levy on the estate (money and property) of a person who has died.
International tax law distinguishes between an estate tax and an inheritance tax an estate tax is assessed on the assets of the deceased, while an inheritance tax is assessed on the legacies received by the estate’s beneficiaries.
What happens now?
With this increase in tax rates, India’s super-rich now pays more tax than the super-rich in the United States. Compared to the approx 43% paid by the super-rich in India, the rich in the US pay a tax of only 37%. This may force the super-rich in India to opt out of Indian citizenship.