Budget 2014: Finance Minister Arun Jaitley retains tax structure for super rich, including 10% levy

NEW DELHI: While middle class taxpayers have welcomed the budget, super rich taxpayers might be sulking. The finance minister has retained the tax structure of the previous year, including the 10% surcharge on tax for those with an income of over Rs 1 crore.

The then finance minister P Chidambaram had introduced the ‘Robin Hood’ surcharge in 2013 as a one-time measure.

This year’s budget has extended the levy. Some experts see a silver lining in this gloomy scenario. “Super rich taxpayers should be relieved that the budget has only retained the 10% surcharge and not increased it,” says Kuldip Kumar, executive director, PwC. The rich taxpayers will also have to contend with the changes in the tax rules relating to debt funds.

Till now, they could invest in debt mutual funds and get taxed at a lower rate after 1 year. The budget has increased the minimum holding period to three years, which will curtail the liquidity.




Also, the option to pay a flat 10% tax has been removed. “Investors will no longer have a choice between flat 10% tax or 20% tax after indexation.

The indexation option will become the norm,” says Divya Baweja, partner, Deloitte Haskins and Sells. However, the redeeming factor is that the budget paves the way for launch of real-estate investment trusts (REITs) that rich taxpayers could invest in.

Also, the launch of retirement funds could help them save for retirement in a more transparent and cost-effective manner.