With Finance Minister P. Chidambaram's Interim Budget retaining the tax on ‘super rich’, individuals and companies earning over Rs 1 crore annually will have to seek a refund in case the full Budget withdraws the levy.
“The full Budget will take place not before July. This means that the super rich will have to make provisions for paying the tax. In case it is withdrawn, they can adjust it or seek a refund,” said a senior government official.
In effect, this means that for salaried employees earning over Rs 1 crore a year, companies will have to factor in the 10 per cent surcharge in their tax deducted at source.
“Based on tax rates, the surcharge will be levied on salaried employees and based on salary structure, the TDS will be done,” said Kuldip Kumar, executive director PricewaterhouseCoopers.
Corporate assessees with annual income exceeding Rs 1 crore would also be expected to calculate their advance tax liabilities including the surcharge, at least for the first installment pending June 15. In case it is withdrawn, it can be adjusted in the second installment.
For individual tax payers, the deadline for the first tranche of advance tax payments is September 15, by when the Finance Act would be passed.
Finance Minister P. Chidambaram retained the 10 per cent surcharge on those earning over Rs 1 crore annually in the Interim Budget. The government also decided to continue a 5 per cent surcharge on domestic companies with total annual income of more than Rs 1 crore but less than Rs 10 crore.
As per the Finance Bill 2014, the surcharge on rich individuals has been continued for one more year, until March 2015. The surcharge will apply to individuals, Hindu undivided families, firms and entities with similar tax status.
The surcharge was imposed in the 2013-14 budget and was earlier scheduled to expire on March 31, 2014.