Tag Archives: Budget 2010

TDS just got a little less tedious

The Budget has given a big relief to taxpayers whose taxes are deducted at source. Under tax deduction at source (TDS), every person responsible for payment of any sum to any person is required to deduct tax at source at the prescribed rate and deposit it with the central government.
Deduction would be in order if the payments exceeded the prescribed threshold limit. But, the Budget has increased the threshold limit of a number of items (see chart). This will be a relief to ordinary taxpayers and particularly to senior citizens whose total income falls below the taxable income. The threshold limit for rental income has been increased from Rs 1,20,000 to Rs 1,80,000. Take for example, a senior citizen whose total income is less than Rs 2,40,000 and who has a rental income of Rs 1,80,000, which he receives from a company.
According to the existing system, the company will pay him the rental after deducting tax at the rate of 10%. Now, to claim the refund for the tax deducted from his rental income as his total income is less than Rs 2,40,000, he will have to file a return with the department. After filing the return, he will have to wait to get the refund.
Under the new system, the TDS will not be affected as his rental income is not more than Rs 1,80,000. This will save him the cumbersome process of filing the return to get refund.

Similarly, the threshold limit for insurance commission for TDS has increased to Rs 20,000 from Rs 5,000. This will save an agent inconvenience if income is less than the taxable income. Otherwise also, he will not have to wait for a refund. These amendments will take effect from July 1, 2010.

Highlights of Budget 2010

Highlights…

  • 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.
  • Income Tax department ready with two-page Saral-2 return forms for individual salaried assesses.
  • New tax rates would offer relief to 60 per cent of tax-payers.
  • Government’s net borrowing to be Rs 3,45,010 crore for 2010-11.
  • Additional deduction of Rs 20,000 allowed on long term infrastructure bonds for income tax payers; this is above Rs one lakh on saving instruments allowed already.
  • A unique identity symbol would be provided to the Indian Rupee in line with US Dollar, British Pound Sterling, Euro and Japanese Yen.
  • Fiscal deficit seen at 4.8 per cent and 4.1 per cent in 2011-12 and 2012-13 respectively.
  • Total expenditure pegged at Rs 11.8 lakh crore, an increase of 8.6 per cent.
  • Gross tax receipts pegged at Rs 7,46,656 crore for 2010-11, non-tax revenues at Rs 1,48,118 crore.
  • FM appeals to “misguided elements” (left wing extremists) to eschew violence and join the mainstream.
  • Planning Commission to prepare integrated action plan for Naxal-affected areas.
  • Defence allocation pegged at Rs 1,47,344 crore in 2010-11 against Rs 1,41,703 crore in the previous year. Of this, capital expenditure would account for Rs 60,000 crore.
  • Fiscal deficit pegged at 6.9 per cent in 2009-10 as against 7.8 per cent in the previous fiscal.
  • Finance Minister to continue giving cash subsidy for fuel and fertiliser instead of previous practice of bonds.
  • Non-plan expenditure pegged at Rs 37,392 crore and Plan expenditure at Rs 7,35,657 crore in budget estimates. 15 per cent increase in plan expenditure and six per cent in non-plan expenditure.
  • Rs 1,900 crore allocated for Unique Identification Authority of India.
  • Rs 1,73,552 crore provided for infrastructure.
  • Need to take firm view on opening up of the retail.
  • Government committed to ensure continued growth of Special Economic Zones development.
  • Repayment of loan by farmers extended by six months to June 30, 2010 in view of drought and floods in some part of the country.
  • One-time grant of Rs 200 crore provided to Tirupur textile cluster in Tamil Nadu.
  • Allocation for new and renewable energy ministry.
  • Clean Energy Fund to be created for research in new energy sources.
  • Rs 500 crore allocated for solar and hydro projects for Ladakh region.
  • Alternative port to be developed at Sagar Island in West Bengal.
  • Allocation for National Ganga River Basin Authority doubled to Rs 500 crore.
  • Government for competitive bidding for coal blocks for captive power plants.
  • Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled to Rs 5,130 crore in 2010-11.
  • Government proposes to set Coal Development Regulatory Authority.
  • Propose to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance infrastructure projects.
  • Interest subvention for timely repayment of crop loans raised from one per cent to two per cent, bringing the effective rate of interest to five per cent.
  • Bottleneck of public delivery mechanism can hold us back.
  • Rs 200 crore provided for climate resilient agriculture initiative.
  • Government to provide Rs 16,500 crore to public sector banks to maintain tier-I capital.
  • Allocation for women and child development hiked by 80 per cent.
  • Government decides to set up National Social Security
  • Fund with initial allocation of Rs 1000 crore to provide social security to workers in unorganised sector.
  • Rs 1,270 crore provided for slum development programme, marking an increase of 700 per cent.
  • Allocation for development of micro and small scale sector raised from Rs 1,794 crore to Rs 2,400 crore.
  • One per cent interest subvention loan for houses costing up to Rs 20 lakh extended to March 31, 2011; Rs 700 crore provided.
  • 25 per cent of plan outlay earmarked for rural infrastructure development
  • Road transport allocation raised by 13 per cent to Rs 19,894 crore, says FM.
  • Allocation for urban development increased by 75 per cent to Rs 5,400 crore in 2010-11.
  • Indira Awas Yojana scheme’s unit cost raised to Rs 45,000 in plain area and Rs 48,500 in hilly areas.
  • Allocation for NREGA stepped up to Rs 40,100 crore in 2010-11.
  • For rural development, Rs 66,100 crore have been allocated.
  • Plan allocation for health and family welfare increased to Rs 22,300 crore from Rs 19,534 crore.
  • Plan allocation for school education raised from Rs 26,800 crore to Rs 31,036 crore in 2010-11.
  • Deficit in foodgrains storage capacity to be met by private sector participation.
  • Exclusive skill development programme to be launched for textile and garment sector employees.
  • Plan allocation for Ministry of Minority Affairs raised from Rs 1,740 crore to Rs 2,600 crore.
  • Plan outlay for Ministry of Social Justice raised by 80 per cent to Rs 4,500 crore.
  • Government to contribute Rs 1,000 per year to each account holder
  • Finance Minister says Government hopes to implement direct tax code from April 2011.
  • Kirit Parekh report on fuel price deregulation will be taken up by Oil Minister Murli Deora in due course.
  • Government has decided to set up apex-level Financial Stability and Development Council.
  • FDI inflows steady during the year. Government has taken series of steps to simplify FDI regime
  • Market capitalisation of five PSUs listed since October increased by 3.5 times.
  • Nutrient based fertiliser subsidy scheme to come into force from April 1, 2010.
  • Nutrient based fertiliser subsidy scheme to come into force from April 1, 2010.
  • Earnest endeavour to implement General Sales Tax in April 2011.
  • Status paper on public debt within six months.
  • Government will raise Rs 25,000 crore from disinvestment of its stake in state-owned firms.
  • Government to provide Rs 300 crore to organise 60,000 pulse and oilseed villages and provide integrated intervention of watershed and related programme.
  • Government to continue interest subvention of 2 per cent for one more year for exports covering handicrafts, carpets, handlooms and small and medium enterprises.
  • Government intends to make FDI policy user friendly by compling all guidelines into one document.
  • RBI considering some additional banking licenses to private companies, NBFC will also be considered if they meet criteria.
  • Export in January encouraging.
  • Need to review the public spending and mobilize resources.
  • FM stresses on the need to make growth more broad-based.
  • Need to ensure that the demand-supply imbalance is managed.
  • Need to review stimulus imparted to economy.
  • Government conscious of the situation of price rise and taking steps to tackle it.
  • Erratic monsoon and drought-like conditions forced supply side bottleneck that fuelled inflation.
  • Double digit food inflation last year due to bad monsoon and drought-like conditions.
  • Figures for merchandise exports for January encouraging after turnaround in November and December last.
    Govt to raise Rs 25,000 cr this year to meet cap expenditure requirements
  • GST and DTC can be introduced in April 2011
  • Direct tax code will be implemented April 1, 2011
  • Final figure may be higher if earnings in last quarters are strong
  • 18.9% growth rate in manufacturing sector in 2009
  • Concerned over emergence of double digit food inflation
  • Export figures encouraging; pvt investments can be expected
  • Double digit food inflation in 2009
  • Need to review stimulus, move to fiscal consolidation
  • Signs of food inflation going to non-food items
  • Steps to reduce public debt, paper to be presented in 6 months
  • 1st challenge: quickly revert to higher GDP growth path of 9%, cross double digit growth
  • 2nd challnge: harden economic growth to make dev more inclusive
  • 3rd challenge: relates to problems in government system
  • Focus shifts to non-governmental actors
  • Uncertainity was there on account of delay in monsoon, concerns about production and food prices.

Income tax slabs raised

Finance Minister Pranab Mukherjee on Friday brought cheers to lakhs of tax income payers by increasing the tax limits which he claimed will help nearly 60 per cent of the tax payers while presenting the Budget for 2010-11.

Making the announcement about increasing the tax limits Mukherjee said that those earning up to Rs 1.60 lakh per annum will now have to pay no tax while those earning between Rs 1.60 lakh to Rs 5 lakh per annum will from now on pay tax at the rate of 10 per cent.

Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will be 20 per cent while those earning more than Rs 8 lakh per annum will pay tax at the rate of be 30 per cent.

New income tax rates

  • No income tax for those earning upto Rs 1.60 lakh per annum

  • For people earning between Rs 1.60 lakh per annum to Rs 5 lakh per annum the tax rate will be 10 per cent

  • Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will be 20 per cent

  • Income tax on income of Rs 8 lakh and above will be 30 per cent

  • New tax rates would offer relief to 60 per cent of tax-payers

  • Additional deduction of Rs 20,000 allowed on long term infrastructure bonds for income tax payers; this is above Rs 1 lakh on saving instruments allowed already

  • Income Tax department ready with two-page Saral-2 return forms for individual salaried assesses.

  • Investment linked tax deductions to be allowed to two-star hotels anywhere in the country.

      Mukherjee began his budget speech by recalling the hard days of past two years, but with an assurance that the worst was over for the economy and the days ahead were promising though not without challenges.

      “Today, as I stand before you, I can say with some confidence that we have weathered this crisis well,” Mukherjee told the Lok Sabha.

      “That is not to say that the challenges today are any less than they were nine months ago, when the UPA was voted back to power under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh,” he added.

      He said three challenges he had listed last year remained relevant today — those of quickly reverting to a high growth path of 9 percent and cross over to double-digit expansion; making growth more inclusive and developing infrastructure in rural areas; and strengthening food security.

      He said in 2009, when he presented the interim budget in February and the full budget in July, the Indian economy was facing grave uncertainty, the economy slowed down and business sentiment was low.

      But this year, the budget has came against the backdrop of the Economic Survey for 2009-10, saying India’s growth can go up to double digit levels in four years, with the country emerging as the fastest growing economy in the world.

      The initial market reaction, as the finance minister began his budget speech was guarded, with the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ruling at 16,347.72 points, against the previous day’s close at 16,254.2 points, with a gain of 93.52 points, or 0.58 percent.

      Those in the packed house presided over by Speaker Meira Kumar, included Prime Minister Manmohan Singh, United Progressive Alliance (UPA) chairperson Sonia Gandhi and Leader of Opposition Sushma Swaraj.

      Although the Budget speech also contained some policy pronouncements and other steps directed at reforms, it is basically an annual statement of accounts for the upcoming fiscal in terms of receipts and expenditure, along with direct and indirect tax proposals.

      The Budget was presented after a quick meeting of the Union Cabinet inside Parliament presided over by the Prime Minister for a customary approval for the proposals.

VIA IBN