{"id":"f-8b070c46fc-5d234460-d828-56be-ab0e-511e1b99b9ca","title":"Govt should refrain from hiking income tax surcharge on super-rich in Budget: Experts","description":"New Delhi, Jan 11 (PTI) The government should refrain from raising income tax surcharge on the super-rich and reintroducing wealth tax in the upcoming 2026-27 Budget, as the move could prompt persons in high-income brackets to leave the country for low-tax jurisdictions, according to tax experts","timestamp":1768124154,"category":"national_v_two","headline":"Govt should refrain from hiking income tax surcharge on super-rich in Budget: Experts","modifiedHeadline":"Experts Urge Govt Not to Raise Super-Rich Tax","subCategories":["scid_2c0dc4ac"],"region":"IN","bundleMetaData":{"bundleId":"ece1ae3d-908e-48c7-9e53-a4aa910ee4db","bundleTitle":"Grow Your Money","cardData":null},"iabCategoryId":"85","fcSummary":"Tax experts advise the government to avoid raising income tax surcharges on the wealthy or reintroducing wealth tax in the upcoming budget. They warn that such moves could prompt high-income earners to leave India for countries with lower taxes, potentially discouraging investment and job creation.","summary":"Experts warn: Tax hikes on the wealthy could trigger an exodus to lower-tax nations, impacting the 2026-27 Budget and the economy.","ctaUrl":"https://trends.glance.com/newz/India_News/IN/en/pti/f-8b070c46fc-5d234460-d828-56be-ab0e-511e1b99b9ca","sourceUrl":"http://www.ptinews.com","bannerImage":"https://g-mob.glance-cdn.com/public/dynamic/720x1280/b5d1f392-388f-4c9a-87cd-14a89b89adeb.webp","content":"

New Delhi, Jan 11 (PTI) The government should refrain from raising income tax surcharge on the super-rich and reintroducing wealth tax in the upcoming 2026-27 Budget, as the move could prompt persons in high-income

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brackets to leave the country for low-tax jurisdictions, according to tax experts.

Currently, a surcharge on income tax is payable by high-income individuals with earnings above Rs 50 lakh. A 10 per cent surcharge is levied on income between Rs 50 lakh and Rs 1 crore, 15 per cent (Rs 1-2 crore), and 25 per cent (Rs 2-5 crore).

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Those earning above Rs 5 crore and are in the new income tax regime pay a 25 per cent surcharge, while those under the old tax regime pay a surcharge at a 37 per cent rate.

According to estimates by independent economists, the GST rate cut and lower income tax collections are likely to cost the exchequer around Rs 2 lakh crore in the current fiscal. Any additional source of revenue in FY27 could help the government in additional allocations towards defence and other areas.

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PWC and Co LLP Partner Amit Rana said the theory that is followed in levying income tax is that there should be vertical equity, meaning the higher one earns, the higher is his/her tax liability.

\"We have a pretty good slab, wherein at the highest level you pay 42 per cent, at the lowest level you pay almost zero, even at reasonable income levels. But, when you start making it (taxation) very prohibitive, you run the risk of high-income earners wanting not to be in India, and that is possible in the world today,\" he told PTI.

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Rana further said the taxation of high-income individuals should be \"carefully balanced\" as they are the ones who create industries and generate jobs.

EY India, Tax Partner, Surabhi Marwah, also asserted that \"there could be a risk\" of high-net-worth individuals leaving the country for low tax jurisdictions if surcharges are high or wealth tax is reintroduced.

\"Tax uncertainty and steep effective rates may play a role in decisions around capital relocation and residency. Stability and predictability in the tax regime may be as important as the rates when the objective is to retain capital and talent,\" Marwah added.

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She said the wealth tax was abolished in 2015 because collections did not justify the administrative effort involved, and from an administrative perspective, the surcharge has generally been viewed as more efficient and less litigious than the wealth tax.

\"With the government now having access to robust data trails through GST, CRS agreements and other systems, policymakers may continue to see surcharge adjustments as a relatively simpler option compared to asset-based valuation regimes,\" Marwah said.

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Shardul Amarchand Mangaldas and Co Partner Gouri Puri said increases in tax rates could encourage capital flight and discourage entrepreneurship and job creation. Moreover, reintroducing a wealth tax would revive concerns about administrative complexity and compliance costs.

\"Capital flight is a genuine risk since mobile families can re-domicile to other jurisdictions with lower rates. There is always global competition to keep tax regimes investor-friendly, and harsher taxes in India may discourage investment and push capital away,\" Puri added.

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Deloitte India Partner Alok Agrawal said in Budget 2023, the government cut the highest surcharge rate for individuals with income above Rs 5 crore from 37 per cent to 25 per cent. This reduction brought down the maximum marginal tax rate for such taxpayers from about 42.7 per cent to 39 per cent.

This change applied from 1 April 2023, i.e., for FY 2023-24 (AY 2024-25) onwards and was applicable only under the new tax regime.

\"So, it seems unlikely that the government would hike this once again within a short span of 3 years,\" he said.

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Agrawal said as far as wealth tax is concerned, there has been a lot of speculation since the last couple of years before the Budget announcement.

However, based on past experience, the absolute collections through wealth tax may not be significant enough when compared to the cost of administering a new levy.

\"So, the government's focus has been instead to improve tax collections by more robust enforcement of the tax law by leveraging technology, sharing of information with other countries, etc,\" he added. PTI JD BAL

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Govt should refrain from hiking income tax surcharge on super-rich in Budget: Experts

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