REUTERS - Finance Minister P. Chidambaram introduced a surcharge of 10 percent for one year on taxpayers with an annual taxable income of more than 1 crore (10 million) rupees, in a bid to raise more revenues for India’s annual budget on Thursday.
In his speech, Chidambaram said only 42,800 persons in the country admitted to taxable income exceeding 10 million rupees per year.
“I am confident that when I ask the relatively prosperous to bear a small burden for just one year, just one year, they will do so cheerfully,” the Harvard-educated politician said in parliament.
“I believe there is a little bit of the spirit of Azim Premji in every affluent taxpayer,” Chidambaram said, referring to the chairman of Wipro who has advocated higher taxes on the well heeled in India.
The surcharge, to be imposed only for the next fiscal year, would apply to individuals, firms and entities.
India has just 35 million taxpayers -- about 3 percent of the population. Only 1.5 million of them declare annual earnings of more than a million rupees, according to finance ministry data.
At present, the top income tax rate is 30 percent, which applies to earnings above 1 million rupees a year.
Chidambaram gave a notional tax break to millions of taxpayers on Thursday, proposing a tax credit of 2,000 rupees in the annual budget to people with total income up to 5,00,000 rupees.
(Click here for story on tax credit of 2000 rupees for taxpayers)
Reporting by India Online