Sujay Nimbalkar has compiled these reviews of the union budget 2010-11 by different chartered Accountants of Belgaum.
1.The increase in Slab rate will be benefiting the particularly the middle class Tax Payers in the Income range of Rs.3.00 Lakhs to Rs.8.00 Lakhs leading to a Savings of Rs. 50000 in tax.
2.Also the proposed weighted deduction of 200% on Research activities to will give a major boost to Technology & Industrial growth.
3.Farmers have been benefited as the effective rate of Interest now on will be 5 %
4.The Increase in Tax Audit limit for Business and Professionals will reduce the paper work as well as the Income tax procedures for Small & Medium enterprises.
5.Charitable Institutions can also carry out Non Charitable activities upto a limit of Rs. 10 Lakhs, this will mean better activities in the nature of public interest.
6.Companies subject to MAT will have to pay additional 5% i.e total 15% as Mat (Minimum Alternate Tax).
Excise Duty :Excise duty is not favorable for large car buyers
Introduction of few more services under the Service Tax net will boost the service tax revenue of the Govt but it is not a welcome by those service providers.
However the large amount of Fiscal Deficit of our economy is cause of concern.
The Basic Exemption Limit in case of Service should have been increased ( on the lines of increase in Income Tax Limit) to Rs.15 Lakhs from the present limit of Rs. 10 Lakhs thereby relieving the small service tax providers from the efforts of Registration under Service Tax rules and following the procedures thereon.
However the agricultural interest rate of 5 % to farmers is favourable.
The levy of additional duty of Re.1 per liter on Petrol and Diesel will indirectly lead to rise in the prices of other commodities and services resulting in increase in Inflation. Also I don’t see any steps taken by our Government to bring down the present inflation.
Our BUDGET 2010, in the backdrop of rehabilitating economies all over the world was being viewed with greater anticipation to pave the road ahead for growth and development. The budget in a very acute sense projects this with following proposals:
Change in income tax rate slabs to the advantage of individual tax payers.
Reduction in surcharge to corporate tax payers.
Abolition of Commodities Transaction Tax.
Retention of same rate of service tax.
Extra boost for investment in Infrastructure Bonds.
Establishment of agencies to monitor the implementation of infrastructure projects.
Other successful programmes of past years revamped to suit the future requirements (NREGS, APDRP, ICDS, SHG, etc.)
However, the budget was condemned by opposition parties on various issues and this happens to be the first budget that led to walkout of opposition parties.
The major short comings in the budget can be owed to the following:
Increase in excise duties and fuel prices.
Postponement of GST to one more year.
No changes in the basic tax rate of corporate tax payers.
The theme of this budget lies in creating demand through surplus funds in the hands of consumers (individuals) through reduced direct taxes and then charging them for consumption through the way of indirect taxes.
In view of all the above, I opine that no budget would satisfy everybody, as it is only a balancing act of Government Revenues and Expenditures, and keep check of the fiscal deficit, which in the current budget is on the higher side at 6.8% of GDP. There is no need to despair and criticize the budget, as other reforms are due in the near future. I am sure that the coming times will bring better reforms and a lot of growth in infrastructure. The present budget is only a half hearted signal in this direction. I hope for better reforms in times ahead.
CA Nikhil Shevade, Kolhapur
The much awaited (as always) Union Budget was kept before the Parliament by the Finance Minister Shri. Pranab Mukherjee on 26th February 2010, which can be termed as a relief oriented budget. This time, however, the aspirations were high due to the global economic meltdown. The year 2009-10 has been a very difficult and testing year for India. The FM had to take certain stern steps and had to keep in mind the fiscal deficit before coming out with the proposal. Fiscal deficit was seen at 4.8 per cent and 4.1 per cent in 2011-12 and 2012-13 respectively as per the Economic Survey.
Salient features of the Budget 2010-2011 in Taxation:
- Direct Taxes:
- FM prunes tax rates:
Income up to Rs 1.6 lakh – Nil, Income above Rs 1.6 lakh and up to Rs 5 lakh – 10 per cent
Income above Rs 5 lakh and up to Rs 8 lakh – 20 per cent
Income above Rs 8 lakh – 30 per cent.
- FM prunes tax rates:
New tax rates would offer relief to 60 per cent of tax-payers.
The increase of minimum personal taxation slab of 10% up to Rs. 5.00 lacs will pave the way for better tax compliances and revenue generation for the Government.
- Income Tax department ready with two—page Saral—2 return forms for individual salaried assesses. The introduction of SARAL II Form will enable the small tax payers to file their return without difficulty.
- The relief upto Rs. 20,000/- under 80 CCE would suitably boost infrastructure sector while simultaneously providing tax relief. This deduction is in addition to the deduction limit of Rs. 1,00,000 already allowed under section 80C.
- The Budget has given some thrust to conversion into LLP (Limited Liability Partnership) without attracting Capital Gains Tax. However, the restrictions and preconditions may be reviewed to provide full benefit to the conversion of such entities.
- While he has left the base rate of 30% the same for corporate taxes, he has cut the surcharge from 10% to 7.5%. This marginal reduction of surcharge will give relief to corporate entities and partially offset the increase in MAT Tax which is raised from 15% to 18% of book profits.
- The thrust given on research and development by enhancing the weighted deduction from 150% to 200% is welcome since it will boost research activity.
- No disallowance under S-40(a)(ia) will be made if after deduction of tax during the entire previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.
Removal of genuine hardships in this area of TDS is welcome. This amendment is proposed to take effect from the Assessment Year 2010-11 and subsequent years.
- Implementation of the much talked about Direct Tax Code from April 2011.
- FBT (Fringe Benefit Tax) remains withdrawn.
- Indirect Taxes:
- The increase in Central Excise Rates by 2% would augment tax revenues while bringing convergence with GST rates.
- Procedural reforms in placing reliance on CA’s certificates for input credits, amendment in demand provision would reduce litigation and give widespread relief.
- Certain accredited news agencies exempted from service tax
- Service tax to remain 10 per cent
- 10 per cent central excise duty on all non-petroleum products.
- 7.5 per cent duty on petrol, diesel, crude restored. Hence petroleum prices will rise.
- Government is actively engaged in finalising structure of Goods & Service Tax (GST Act) regime; hopes to implement it from April 2011.
The Budget skillfully balances the need to step up the economic growth on one side, check inflation on the other side and also address the socio-economic needs of the nation. I welcome the Budget however the fiscal deficit and food inflation control measures have to be taken.