Paragraph A of Part III to the First Schedule – Proposed Surcharge @ 10% for income exceeding Rs 50 lakhs – Removal of surcharge to ensure parity in effective tax rates vis-à-vis small and medium companies
Surcharge @ 10% is proposed in cases where total income of an individual/HUF/AOP/BOI exceeds Rs.50 lakhs but do not exceed Rs. 1 crore. Surcharge of 15% would continue to be applicable where the total income of an individual/HUF/AOP/BOI exceeds Rs 1 crore. [Read Surcharge on income above Rs 50 lakhs w.e.f AY 2018-19 ]
The levy of such surcharge would result in inequity in the effective rate of tax (i.e., more than 30%) for individual/HUF/AOP/BOI assessees with total income exceeding Rs.50 lakhs vis-cl-vis the rate of 25% proposed for small and medium companies. The inequity would arise not only vis-cl-vis salaried assessees but individuals/HUFs engaged in small businesses would also have to bear the brunt of surcharge which may go against the present Government’s aim of promoting ease of doing business.
Suggestion:
It is suggested that the proposed surcharge@10% for total income between Rs.50 lakhs to Rs. 1 crore be withdrawn to ensure equity in effective rate of tax vis-a-vis the proposed rate for small and medium companies.
Source- ICAI Post-Budget Memoranda-2017
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