Wealth tax abolished; addl 2% surcharge on super rich

Sanjeev Sharma

Tribune News Service

New Delhi, February 28

In a major shift, Finance Minister Arun Jaitley today abolished the wealth tax, which was getting measly collections, and replaced it with a surcharge of 2% income tax on the super rich.

Jaitley said the wealth tax was proposed to be abolished and replaced with an additional surcharge of 2% on the super rich with the taxable income of over Rs 1 crore. With this additional surcharge, a collection of Rs 9,000 crore is targeted against a tax sacrifice of Rs 1,008 crore.

The rich will also bear the brunt of a new black money law. Jaitley said a considered decision has been taken to enact a comprehensive new law on black money to specifically deal with such money stashed away abroad. The Bill in this regard is proposed to be introduced in the current session of Parliament.

The key features of the Bill will include punishment of rigorous imprisonment up to 10 years for concealment of income and assets and evasion of tax in relation to foreign assets. Penalty for such concealment of income and assets at the rate of 300 per cent of tax shall be levied. 

As regards curbing domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current Session of the Parliament. Jaitley said this law will enable confiscation of benami property and provide for prosecution, thus, blocking a major avenue for generation and holding of black money in the form of benami property, especially in real estate.

A new initiative on gold monetisation has also been announced. Stating that India is one of the largest consumers of gold in the world, Jaitley proposed to introduce a Gold Monetisation Scheme, which will replace both the present gold deposit and gold metal loan schemes.

The new scheme will allow the depositors of gold to earn interest in their metal accounts and jewelers to obtain loans in their metal account. Banks and other dealers would also be able to monetise this gold. He also proposed a Sovereign Gold Bond as an alternative to purchasing metal gold.