Wealth tax abolished, 2% surcharge on super rich

In a move that will not only make it easier for super rich individuals to file their tax returns but also result in widening of the tax net and help the government raise their tax collections significantly, the finance minister announced to abolish the wealth tax and instead levied an additional surcharge of 2 per cent on individuals with taxable income of Rs 1 crore and above.

While wealth tax amounted to 1 per cent on assets of Rs 30 lakh and above (excluding equities, bonds and first house), the FM said that total wealth collection in 2013-14 stood at only Rs 1,008 crore. He, however, further stated that an additional surcharge of 2 per cent over the existing 10 per cent for individuals earning a net taxable income of Rs 1 crore will lead to collections of Rs 9,000 crore.

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“This will lead to tax simplification and enable the department to focus more on ensuring tax compliance and widening the tax base,” said the finance minister.

Financial planners welcomed the move. “It takes away the hassles of filing wealth tax and simplifies the process of filing a return as you have to now pay 12 per cent instead of 10 per cent in surcharge. It will also lead to more people filing it as earlier a number of people were not even paying wealth tax,” said Amar Pandit, a Mumbai-based financial planner.