Income Tax Calculator AY 2019-20: How new surcharges will impact taxpayers

Income tax Calculator 2019-20: In her maiden Budget speech today, Finance Minister Nirmala Sitharaman proposed to increase surcharges on high-income individuals earning above Rs 2 crore.

Finance Minister Nirmala Sitharaman (C) gestures during a photo opportunity as she leaves her office to present the federal budget in the parliament in New Delhi. Image: Reuters

Income tax Calculator 2019-20: In her maiden Budget speech today, Finance Minister Nirmala Sitharaman proposed to increase surcharges on high-income individuals earning above Rs 2 crore. Before announcing this, Sitharaman took the opportunity to first state the moves undertaken by Narendra Modi government to decrease tax burden on the common man and thanked taxpayers for their role in "nation building."

"Mr Speaker Sir, as I have stated earlier, we have taken several measures in the past to alleviate the tax burden on small and medium income-earners as those having annual income up to 5 lakh are not required to pay any income-tax. We are thankful to the taxpayers who play a major role in nation building by paying their taxes" the Finance Minister said.

Sitharaman, however, proposed to increase surcharges for the superich. She said, "However, in view of rising income levels, those in the highest income brackets, need to contribute more to the Nation’s development. I, therefore, propose to enhance surcharge on individuals having taxable income from 2 crore to 5 crore and 5 crore and above so that effective tax rates for these two categories will increase by around 3 % and 7 % respectively."

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The following calculation by Tarun Garg, Manager – Tax, Deloitte Haskins & Sells LLP, shows how individuals earning above Rs 2 crore will be impacted by Sitharaman's proposal:

Income Tax Calculator FY 2019-20 for High Income Individuals:

Taxable income	1.5 Crore	2 crore	2.5 Crore	3 Crore	5 Crore	8 Crore	10 Crore
Current surcharge rate	15%	15%	15%	15%	15%	15%	15%
Proposed surcharge rate	15%	15%	25%	25%	25%	37%	37%
Current taxes including surcharge & cess (A)	51,57,750	69,51,750	87,45,750	1,05,39,750	1,77,15,750	2,84,79,750	3,56,55,750
Proposed taxes including surcharge & cess (B)	51,57,750	69,51,750	95,06,250	1,14,56,250	1,92,56,250	3,39,28,050	4,24,76,850
Increase in taxes (B) – (A)	-	-	7,60,500	9,16,500	15,40,500	54,48,300	68,21,100
Current Marginal Tax rate	35.88%	35.88%	35.88%	35.88%	35.88%	35.88%	35.88%
Proposed Marginal Tax rate	35.88%	35.88%	39.00%	39.00%	39.00%	39.00%	42.74%

The calculator prepared shows that income tax for those earning Rs 10 crore per annum will now have to pay Rs 68 lakh.

For those earning between Rs 3 to Rs 5 core, Garg told Zee Business Online: "Current Income tax on Income of INR 3 Crore stands at INR 1,05,39,750. With the proposed increase in the surcharge rate from 15% to 25% in the income category of more than INR 2 Crore to INR 5 Crore, the tax on the income of INR 3 Crore comes out to be INR 1,14,56,250 i.e. an increase of INR 9,16,500.

"Similarly, the current Income tax on Income of INR 8 Crore stands at INR 2,84,79,750. With the proposed increase in the surcharge rate from 15% to 37% in the income category of more than INR 5 Crore, the tax on the income of INR 8 Crore comes out to be INR 3,39,28,050 i.e. an increase of INR 54,48,300," Garg concluded.

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