When Jaitley robs Peter to pay Paul

Get ready to pay more for your vanity

The finance minister plans to squeeze India’s 42,800 citizens with incomes above Rs 1 crore per annum, to subsidise the small taxpayers. Not only will they have to shell out a higher surcharge of 15 per cent (against 12 per cent earlier) on their income-tax, he is also forcing them to cough higher dividend distribution tax on incomes from equities and mutual fund investments, besides an infrastructure cess and krishi kalyan cess. Besides, the Budget makes cigarettes, branded clothes and luxury cars more expensive.

Jaitley has proposed a higher dividend distribution tax (DDT) on individuals receiving dividend income in excess of Rs 10 lakh per annum at the rate of 10 per cent of the gross amount of dividend.

Pankaaj Maalde, a certified financial planner said, “Assuming a person had a dividend income of Rs 25 lakh, earlier his net income after paying DDT amounted to about Rs 20 lakh. Now he will have to pay Rs 2 lakh more and receive a net income of Rs 18 lakh.”

Taxpayers with annual taxable incomes of over Rs 1 crore would effectively pay approximately 1 per cent more income-tax at 35.6 per cent next fiscal against 34.6 per cent now, following the hike in surcharge on income tax by three percentage points. Tax will also be deducted at source at the rate of one per cent on purchase of ‘luxury’ cars exceeding value of Rs 10 lakh and purchase of goods and services in cash exceeding Rs 2 lakh. In doing so, the finance ministry has attempted to redefine ‘luxury’ for cars, as the automobile industry has traditionally slotted cars in the Rs 25 lakh plus range as luxury models.

Jaitley has also proposed an infrastructure cess of 1 per cent on small petrol, LPG, CNG cars, 2.5 per cent on diesel cars of certain capacities and 4 per cent on other higher engine capacity vehicles and sports utility


The securities transaction tax in the case of ‘options’ is being raised to 0.05 per cent from 0.017 per cent. Further, krishi kalyan cess will be levied at 0.5 per cent on all taxable services, with effect from June 1.

Jaitley’s also made buying jewellery more expensive, levying excise duty of 1 per cent without input tax credit or 12.5 per cent with input tax credit on articles of jewellery (excluding silver jewellery, other than studded with diamonds and some other precious stones), with higher exemption and eligibility limits of Rs 6 crore and Rs 12 crore, respectively. Besides, excise on readymade garments with retail price of Rs 1,000 or more is being raised to 2 per cent. Excise duties on various tobacco products other than beedi have been raised by about 10 to 15 per cent.



  • Wean off the dependence on increased tax collection from diesel and petroleum

    As reported by this paper, despite international crude oil prices ruling in a range of $50 to $60, Indian consumers are paying the same prices as they


Stay informed on our latest news!


Sandeep Bamzai

Cut & Thrust: Interesting times

Russia’s ultra nationalist supreme leader, the all powerful Vladimir Putin ...

Sachin Shridhar

Strip numbers, see truth

Indian Parliament has over has over 34 per cent of ...

Rajgopal Nidamboor

That divine mosaic of art and science

Our old, inborn fancy to present complex explanations as a ...