High networth individuals took a hit on Friday after Finance Minister Nirmala Sitharaman proposed to increase the surcharge on individuals having taxable income above Rs 2 crore.Presenting the first Budget of the Modi government in its second term, Sitharaman said surcharges on individuals having taxable income of Rs 2 crore to Rs 5 crore and Rs 5 crore and more have been raised by around 3 per cent and 7 per cent, respectively.“The announcement is a body blow to high net worth investors (HNIs). The effective tax rate on biggest bracket goes to 42 per cent after the hike,” said Amar Ambani, Head of Research, YES Securities.Ishita Sengupta, Partner for Personal Tax at PwC India, said the effective rate would be 39 per cent on taxable income between Rs 2 crore and Rs 5 crore and 42.74 per cent for income above Rs 5 crore after the surcharge hike.The benchmark Sensex plunged more than 450 per cent after the Union Budget, 2019. In the 30-share pack, NTPC, YES Bank , ONGC, TCS, Sun Pharma and Vedanta slipped over 2 per cent in afternoon trade.“The big surcharge on income-tax on the high income group and possible squeeze of secondary market liquidity due to disinvestment and increased public shareholding is causing the stock market to fall today,” Ambani said .The surcharge will be much higher to give such effect on the total tax. As per the Finance Bill, 25 per cent surcharge on income above Rs 2 crore and 37 per cent for those earning above Rs 5 crore will mean an effective rate of 39 per cent and 42.744 per cent, said Ishita Sengupta, partner of PwC.Meanwhile, the Finance Minister also proposed to levy 2 per cent tax on cash withdrawal of over Rs 1 crore in a year. "This will help build a more transparent digital economy," said Ambani of YES Securities.