The Super-rich tax surcharge that was introduced last month in the financial budget by Nirmala Sitharaman, is applicable from April 1,2019. The super-rich are probably to be hit with a double whammy. They’ll need to pay interest on the advance tax installment that was due on June fifteen, in line with their enlarged liability on the back of higher surcharge on those with incomes higher than Rs two crore.
The individuals impacted due to this are caught in dilemma as they are not sure about the proceedings. Experts opinion on taxation says that government should provide a one-time waiver atleast as taxpayers aren’t to blame. However, considering the current situation it is highly unlikely.
This is unlikely to be waived because government is currently focusing on other important issues including the Kashmir. They are the high-priority at the moment as China is busy with US and Pak is not in a position to retaliate.
Government officials however tried to play the ceasefire that the penalty against late payment would be applicable only from June 15. They also said that the interest amount would be negligible.
For those who aren’t aware, government has increase surcharge for those earning from Rs 2 Crore to 5 crore to 25%. This was earlier capped at 15%.
Similarly for Rs 5 crore and above, this has bee increased to 37% now. With this surcharge, their effective taxation is whopping 39% and 42.74%. The super-rich tax has now caused havoc.
Advance tax is paid in four installments — in June, September, December and March. This is adjusted against the final tax liability computed at the end of the year. As per the provisions of the income tax law, 15% of the total evaluated tax liability is to be paid by June 15. If the installment is not paid in time or there is a shortfall, the assesses has to pay interest at the rate of 3%.