THE BIG DAY:THE BUDGET DAY

BUDGET SESSION: INDIAN PARLIAMENT

The Budget session of Parliament will begin on February 21 and the General Budget will be presented to Lok Sabha on February 28.
The session will be in two parts -the first up to March 16 and second from April 4 to April 21, it was officially announced on Monday.
The session will start on February 21 with the President’s Address to a joint sitting of both the Houses outlining the government’s policies and programmes for the next financial year.
The Railway Budget and the Economic Survey will be presented to the Lower House on February 25. Finance Minister Pranab Mukherjee will present the general budget on February 28.

Budget 2011-2012 will have TAX break and VAT reduction

Indian Finance minister Pranab Mukherji has hinted that the raising inflation has given a big stroke to the common populace and for this reason an Income tax rebate will be given to the populace of India. In the next budget session in April 2011, the finance ministry is said to raise the income tax exemption limit to Rs 2 lakhs, under the direct taxes code which implies to 2012-2013 tax payers.
The budget session on February 28th, 2011 will officially release the about the IT exemption limit and this may be a bit of relief to the populace, who are vexed up with high inflation and basic commodities price hike. The Indian populace also needs a relief from the high raise of petrol prices and a solution to curb the raising prices of food items.
Indian home minister P Chidambaram has received a letter from Sonia Gandhi, to find out ways to lower the vat tax on fuel and basic commodities, which will give some relief to the over burdened populace of India. It is a fact that Indian consumers are paying Rs 4 as VAT for each liter of petrol, they are using.
So, if the government slashes the VAT to around 50% on basic goods and fuel, then the Indian populace can take a sigh of relief in this financial year of 2011-2012.

FM not in the mood to cut income tax rates

Those looking for income-tax relief in the forthcoming Budget to fight rising food prices are likely to be disappointed.
Taxpayers can expect some relief from high inflation in Budget 2011-12 as the government may raise the income tax exemption limit for individuals.
Tax incentives to software companies under Sections 10A and 10B are set to continue next year, with a change in the basis of benefits from profit-linked to investment-linked.
There were indications that Sections 10A and 10B would continue, but there was no clarity on whether it would remain profit-linked in 2011-2012 or would change to being investment-linked.
Moreover, they said, as the government is committed to raising the income tax exemption limit from Rs 160,000 per annum to Rs 200,000 in line with the Direct Taxes Code in 2012-13, tax payers could expect at least some relief in the upcoming Budget on February 28.
currently, the exemption limit is Rs 1.6 lakh (Rs 160,000) and considering the fact that inflation is running at around 10 per cent, an increase of 10 per cent in the exemption limit could be expected in the upcoming Budget.
This would mean that the exemption limit would probably be enhanced by Rs 15,000 to 1.75 lakh (Rs 175,000).
This step would result in a revenue loss of around Rs 4,000 crore (Rs 40 billion), said the official, adding that this would mean a Rs 1,500 tax benefit a year to the taxpayer.
He said that the increase in the exemption limit would also be a step towards aligning the tax structure with DTC, as the exemption limit under the proposed regime is Rs 2 lakh (Rs 200,000) a year. DTC is expected to come into effect from 2012-2013.
The Direct Taxes Code Bill, 2010, was introduced in the Lok Sabha on August 30 last year and it was proposed to implement the Code from April 2012.
The Income Tax Department had chalked out a plan for the preparation and its implementation from next year, said the official. A few changes due to political compulsions, however, should not be ruled out completely, said the official.
The department is focusing on developing an integrated technology platform to ensure a smooth transition to DTC from the existing Income Tax Act. The Code offers an opportunity for the Income Tax Department to integrate its people, process and technology through an integrated technology platform.
In view of the economic recovery, Mukherjee had started the process of withdrawal of stimulus by raising tax rates in the 2010-11 Budget.
With the economy recording a growth rate of 8.9 per cent in the first half of the current fiscal, Mukherjee is expected to further withdraw the stimulus with a view to reduce the fiscal deficit, which is expected to be about 5.5 per cent of the gross domestic product in 2010-11.

Salaried taxpayers may be spared filing returns

The Income Tax department is open to examining a proposal to exempt them from the annual chore.
Asked whether the department would think about doing away with Income Tax returns for employees, who had no other income apart from salaries in a financial year, Central Board of Direct Taxes chairman Sudhir Chandra said the department would certainly consider the proposal.

This proposal, if approved, will benefit a large section of people and would reduce the I-T department’s workload in a big way.
Of the country’s 35 million taxpayers, roughly half are salaried employees.
The argument in favour of the proposal was that income records for this cl-ass of taxpayer were available with both employers and banks.
He said the I-T department is planning to release all small-value refunds before March 31. “I will ask my officials to give most refunds by the end of the current financial year,” he said.
Some of the refunds will be given to taxpayers directly through State Bank of India under the refund banker scheme.
Under this, tax refunds are sent to taxpayers by State Bank of India, either through the electronic clearing service mode or in physical form.
In 2009-10, the I-T department gave over Rs 58,000 crore (Rs 580 billion) in refunds, which was 50 per cent more than the previous year.
The IT department has opened a Central Processing Centre in Bengaluru for faster processing of claims for electronically-filed returns.
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The whens and hows of Budget preparation

The finance minister’s pre-Budget consultations with various groups are over and outsiders, including journalists, are not allowed inside the building now.
Preparations for Budget 2011-12 are in full swing. Intelligence Bureau sleuths in plain clothes are watching each and every movement of the team which prepares the Budget documents.
The Budget cycle normally starts towards the end of September and lasts till May in the next financial year.
On the presumption that the Budget shall be presented at 11 a.m. on the last working day of February, the Budget Division in the finance ministry prepares a comprehensive schedule for carrying out Budget preparation activities.
The Budget is prepared by the Budget Division on the basis of detailed estimates of expenditure and receipts received from various departments and ministries.
The Budget is kept a top secret mainly due to indirect tax proposals, which, if leaked early, can result in hoarding.
At least a month before the presentation of the Budget, entry to North Block is restricted and all communications of the officials working on the Budget are monitored.
Introduction of the Direct Taxes Code and Goods & Services Tax is likely to make the annual Finance Bill less relevant. This would lift the veil of secrecy that currently surrounds around tax-related proposals in the Budget.
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