Tax Relief

Tax relief for salaried class: Finance Minister Pranab Mukherjee has given relief to the salary class by widening the tax slabs and about sixty percent payers will get advantage from new announced tax rates which will be implemented from month of April. According to new tax slab earning up to Rs 1.6 lakh will be free from tax while the salary above Rs 1.6 lakh up to Rs 5 lakh people will be charged 10 percent while from above Rs 5 lakh up to Rs 8 lakh rate for tax will be 20 percent. Those people who are earning above Rs 8 lakh will be charged with 30 percent. Businesses were exempted from auditing in past till 40 lakh and now in this budget it is increased up to Rs 60 lakh according to which people who are having turn over below are exempted from auditing while professionals earning up to Rs 15 lakh are also exempted from auditing obligations of their accounts. Finance Minister Pranab Mukherjee before announcing the direct taxes said that tax reform is a process not an event. Finance minister will allow up to Rs 20,000 for investment in infrastructure bonds and these investments linked tax deductions will be allowed to two-star hotels anywhere in the country. The deduction would be in addition to Rs.100, 000 allowed under section 80C of the Income Tax Act. The government will also introduce Saral 2 – a simpler format of filing tax returns – from the next assessment year. Salaried tax payers currently use Income Tax Return-1 forms to file returns.

Tax Relief

Other points on taxes: Minimum alternate tax has been increased to 18% while the direct tax receipts to fall by Rs 56, 000. Corporate tax surcharge has been reduced from 10 percent to 7.5 percent and service tax on the transport of cereals and pulses has been removed. Finance minister has increased one year to avail tax break to complete housing projects. In past it was four years to avail tax break for completing the housing project while it will be now five years. Now there will be no capital gain tax on the conversion of a kind of business entity into a Limited Liability Partnership and service tax has been kept unchanged at 10%, to maintain the stimulus. Finance minister Pranab Mukherjee was eyeing at the growth of the economy of country as well as salaried people. He also taken care of small business organizations and announced some attractive budget for them as well.

Tax Relief

PM said mixed budget: Indian Prime Minister Manmohan Singh highly praised Finance Minister Pranab Mukherjee for presenting such a balanced budget with right mix which enables the growth of the economy as well as sticking to the fiscal deficit consolidation requirements. He said that his overall impression is that the Finance Minister Pranab Mukherjee has done a right mix of estimating the growth requirements as well as same time building in it a certain amount of moderation on the price front. He said that one must look at the total picture emerging from the budget, the revenue gains for the finance minister is only Rs.20, 000 crore in an economy as large as India. When PM was asked if the proposed hikes in central duties would result in inflationary trends he said that this resource mobilization effort should not trigger any inflationary pressures at the same time it gives a much needed signal. The finance minister has not gone back to the pre-stimulus excise duty rate and he has exercised moderation while signaling to the economy that you cannot have all things together. He was happy with the budget presented by the finance minister as he has taken into consideration various factors which can help Indian economy to grow and these were some necessary changes which were required.

Tax Relief

Opposition walks out: It was first time when the opposition walked out of the Lok Sabha when Finance Minister Pranab Mukherjee was presenting the union budget for year 2010-11. Opposition was against some tax proposals made by the Finance Minister. Members of various parties like BJP, the Janata Dal-United (JD-U), the Telugu Desam Party (TDP), Left parties, the Samajwadi Party (SP), AIADMK and the Rashtriya Janata Dal (RJD) rose from their seats when Mukherjee spoke of the basic duty on crude oil being restored. Mukherjee was not happy with the reaction of the opposition’s reaction but he said that is constitutional requirement. The opposition left the house and did not return back and Mukherjee read rest of 15 minute speech in their absence. The only ones who were left were Independents like Jaswant Singh, Digvijay Singh and Inder Singh Namdhari as well as the Janata Dal-Secular (JD-S) and the Trinamool Congress-backed Socialist Unity Centre of India (SUCI). The walkout spoiled the presentation of union budget which was about 1 hour 45 minutes long and had begun with silence with big hopes from the Finance Minister. Acharia, the longest serving member of the Lok Sabha and a Communist Party of India-Marxist’s (CPI-M) leader said that it is first time in Indian history of parliament when entire opposition walked out when budget was presented while it was not a big deal in past when one or two opposition constituents walked out of parliament but not whole. He is in his ninth term as a Lok Sabha member. Various leaders of oppositions like JD-U leader Sharad Yadav and Communist Party of India’s (CPI) Gurudas Das Gupta, BJP leader Yashwant Sinha also failed to recall whether it happened ever in past as happened this time. Trinamool Congress which is ally of the ruling UPA were also against the hike in the petro-product prices telling it as a greater burden on the people while people are already suffering from a high rate of inflation. Chief Whip in Lok Sabha Sudip Bandopadhyay said that we would prefer that in this crucial juncture, this decision be kept on hold and he also said that in principle opposed to any proposal to raise the prices of petroleum products at this time when the prices are already high. Common people should not be allowed to suffer any further.