Posts Tagged ‘income tax’

Points Discussed in Budget :)

  • Excise duty on silver rose to 10%
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  • Surcharge on domestic cos reduced to 7.5% from 10%..
  • Excise duty on oil rose to 10%.
  • Fiscal deficit will be at 5.5% in 10-11, at 4.8% in 11-12 and 4.1% in 12-13
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  • Revised income tax slabs 馃檪
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  • Net market borrowing for 2010-11 at Rs 3, 45,010..
  • Extended 1% interest subsidy scheme for affordable housing.
  • Rs 5400 cr of funds allocated for urban development..
  • Defense allocation rose to Rs 147344 cr.
  • Rs 48000 cr allocated for Bharat Nirman.
  • Farmer loans extended for 6 months to June 30th 2011.
  • Allocated Rs1.73 lakh cr for infrastructure..
  • Agriculture credit flow targets at Rs. 375000cr.
  • FDI worth $20.9 bn in April to Dec 2009.
  • Proposed Rs 16500 cr for PSU banks.
  • Challenge for a 9% growth, need to review stimulus.
  • Stay Tuned聽for More updates 馃檪

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    Note : For More Latest Industry, Stock Market and Economy News and Updates, please聽click here

    BUDGET PREVIEW 2011 – Final Part :)

    Continuing The Final Part Of The Budget Preview 馃檪

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    We believe that this year Finance Minister will take a gradual move towards fiscal consolidation by聽increase in Excise duty. Excise duty forms around 40% of Indirect Tax collections. Excise duty collections were聽down by 13% in April to December period to close to Rs. 70,000 crore comprising around 66% of Budgeted聽Estimates of Rs. 1,06,477 crore. The factors that contribute to our belief are; 馃榾

    路Though the growth in corporate sales is not astonishing but profitability has improved to due to various聽cost control efforts which is quite evident by the corporate tax collection that have shown a growth of聽44% in December 2009. Cumulatively Net direct tax collections increased by 8.5 per cent during April-聽December 2009.

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    路India being a consumption story has shown healthy growth in sales of consumer durables. For instance Automobile industry’s sales聽went up by 32 per cent in December over the same month in 2009. It is believed that a gradual hike in duty will get absorbed聽without affecting medium term prospects of the industry.

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    路Partial rollback would also help the finance ministry effect a calibrated integration of excise duty with the services tax by the end聽of the next financial year, when the proposal for a Goods and Services Tax is likely to be implemented.

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    路Finance Minister had indicated that he would like the fiscal deficit for 2010-11 to be around 5.5 per cent of GDP. The proposal to聽raise excise duty by two hundred basis points is being endorsed also to help the finance ministry raise more revenue and stick to聽the projected fiscal deficit target.

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    Disinvestment would be the key focal point in the Budget. We believe that the Finance Minister would place high targets from the PSU sale proceeds. The factors that contribute to our belief are:

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    路In order to bring Fiscal deficit under control that would subsequently ease upward pressure on interest rates.

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    路This will help Investment in social sector projects which promote education, health care and employment & will also help in聽Capital investment.

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    On the Corporate Tax front, we believe that the Finance Minster is unlikely to lower tax to 25% from the current 30% as per Industry demands. The rationale behind our belief is:

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    路The direct tax code that proposes corporate tax to be 25% will be implemented in fiscal 2011 鈥 2012 & Industry have to wait till its聽implementation as it will replace the existing Income Tax act.

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    路Already, government is trying to make up more tax revenue & is unlikely to take step in this direction as it may come as an聽obstacle in order to control fiscal deficit.

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    On deregulation of Petroleum sector, we believe that in order to cut down on subsidies government could provide the road map for partial deregulation of the petroleum sector. The road map may provide OMC’s to review the prices of petrol and diesel on a聽regular basis however, LPG and kerosene could continue to be administered by the government. Factors that complement to our belief:

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    路In view of the commitment of the UPA regime to flagship social security programmes聽that require huge allocations, Mr. Mukherjee has told Mr. Deora that it would not be聽possible to provide huge subsidies to the OMCs in future.

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    On the External Economy side, we expect that the Finance Minister may continue to聽provide certain concessions like interest subsidy and extension of other export oriented聽schemes. The rationale to our belief:

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    路In the recent two months i.e. November & December, merchandise exports registered a聽positive growth of 18.2% & 9.3% respectively. But in the period of April to December聽2009, the exports were still negative to the tune of 20% as compared to the聽corresponding period.

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    路The world economic recovery especially in US & Europe is still questionable & the regions constitute approximately 15% & 21%聽respectively of our merchandise exports, thus directly affecting the trade.

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    路Sectors such as engineering goods, jute, carpets, handicrafts and leather goods are continue to be in bad shape, others such as聽gems & jewelry drugs, plastics and petroleum products are showing improvement.

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    路Concluding, the main point is that it may not be a good time to take back the stimulus so soon that may derail the recovery.

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    Note : For More Latest Industry, Stock Market and Economy News and Updates, please聽click here

    BUDGET PREVIEW 2011 – Part 1 :)

    At last the much talked topic 鈥淏UDGET鈥 among AAM ADMI, CORPORATES or聽INVESTORS that comes to INDIA 鈥 is approaching. 鈥淭he million dollar question is that will 2010 budget be another year to cheer the聽economy by giving some relief in indirect taxes, personal income tax and by聽implementing various schemes to induce social & infrastructure sector in聽order to maintain high trajectory growth鈥.

    Generally, it is seen that the聽incentives which are given in the period of recession or slow down and moreover,聽when the government in power is about to complete its tenure, are above from聽expectations. It is seen that budget in two years usually comes good when the聽Govt. is in the last year of power & in the first year of the rule as a vote of thanks.The mid three years out of the five year term usually remains tight on the聽policies.

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    For the common man, we expect that Finance Minister may raise the exemption limit in personal income tax & investment聽limit Under Sec.80C. The reason to our belief:

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    1. The rocketing prices of food articles like sugar, pulses and vegetables have been cutting the pockets of a middle class.

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    2. By coming out with these measures (above mentioned) the government will lower the tax incidence on the common man & will聽also help it to put the opposition on backfoot.

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    By & large everyone is aware of the level of fiscal deficits globally and many of us know that it is essential to minimize deficits &聽returning to fiscal consolidation is necessary. The main question is why it is so important. Let’s look at the consequences of high聽fiscal deficit:

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    A risk to high government borrowings leads to more debt servicing that cuts expenditure on various social welfare schemes, if TAX聽revenues do not matchup. In the current financial year, out of the 4 lakh crore borrowing, more than 50% has gone towards interest聽payments.

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    Secondly, the higher government borrowing from market means less availability of funds to private borrowers. In the current Fiscal year, due to dismal credit growth, we haven’t seen pressure on Interest rates. But going forward we foresee normal聽credit growth in the next financial year. However as the government borrowing is expected to remain at same level in the next聽fiscal, pressure on interest rate is expected.

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    So, this year the theme of Budget would any way be to maintain economic recovery through investment for building infrastructure聽rather than funding the expenses/consumption. But at the same time focus will be to bring down the fiscal deficit.

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    The catch here is聽bringing down deficit by cutting expenditure means risk to growth & the other alternative is to increase revenues. While the direct聽tax collections are encouraging, on the indirect taxes front the government is still struggling to get desired revenues. This is聽because after September 2008, when the global financial system collapsed, the government came out with stimulus packages to聽keep up the desired growth pace.

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    Excise rates since December 2008 had been progressively cut from 16, 12 and 8 per cent to 10, 8聽and 4 per cent respectively depending on the product in question. Service tax was also reduced from 12 to 10 per cent.

    Gifts Will Be Taxed as Income From October 1 :)

    Receipt of gifts after September 30 will be treated as your taxable income !

    Receipt of gifts after September 30 will be treated as your taxable income !

    If your friend had promised to gift you a diamond studded gold watch worth Rs 3 lakh, better it would have been that you should have encashed that promise in September itself.

    The receipt of gifts or say above mentioned gift after September 30 will be treated as your taxable income from now onwards, attracting a straight income-tax of Rs 92,700, if you fall in the top tax-bracket of 30.9%.

    馃槮

    Prior to this, only gifts of any sum of money (and not gifts in kind) in excess of the prescribed limit of Rs 50,000 were taxed as income in the hands of the recipient individual or HUF,
    subject to specified exceptions : such as receipts from relatives or on the occasion of marriage or under a will.

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    EIGHT SPECIFIED GIFTS IN KIND IN TAX TRAP

    The changes come as per the new provisions of Section 56(2)(vii) introduced by the Finance Act, 2009, and slated to be effective from 1st October, 2009.

    Eight specified properties, including land and building, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures and any work of art, received by an individual or HUF, either by way of gift or for a purchase consideration that is treated by the assessing officer as inadequate, then the market value of such gift or the differential value of such purchase,(if exceeding Rs 50,000), will be taxed as income from other sources.

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    Interestingly, with only eight properties specified in the hit list, a host of other valuables such as motor cars, electronics, furniture, air tickets etc. have still been kept out of the tax purview and you can thus enjoy the luxury of receiving gifts of any of these even beyond October, 2009.

    Fortunately, the specified exceptions, such as receipts from relatives or on the occasion of marriage or under a will, as currently applicable to cash gifts, will continue to apply in case of gifts in kind also.

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    However, the definition of 鈥榬elative鈥 will apply not as understood in the common parlance, but as prescribed in Section 56.

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    Consumer Confidence In India?? Excellent & On Upswing ;)

    Indian COnsumers Most Confident

    Despite below average monsoon, INDIA has emerged as the second most optimistic nation across the world in terms of consumer confidence level.

    Majority of people have expressed their positive opinion about job prospects, personal finances and their willingness to spend in the next 12 months. 馃檪

    A survey conducted by global consultancy firm Nielsen throws light in this regard.

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    According to the survey, consumer confidence in India is on upswing, registering a 13-point rise to 112 index points in the second quarter, second only to Indonesia (113 points).

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    鈥淭he recent elections in India have had a positive effect on Indians鈥 sentiments towards its economy.

    With the UPA government back in power for the second-term, consumers are more confident that political and policy continuity will help recover the Indian economy,鈥欌

    馃檪

    The consumer confidence in India witnessed an uptrend on three parameters鈥

    Job Prospects,

    Personal Finances and

    Willingness to Spend.

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    In terms of job prospects, Over half of Indian consumers are optimistic that job prospects will either be excellent (13%) or good (55%) in the next 12 months.

    India ranked second after Indonesia in this regard. 馃檪

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    When it comes to spending habit, about 4% Indians think this is an excellent time to buy the things they want and need, and 39% think it is a good time to buy things.

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    Regarding personal finances, Indians are the most optimistic globally as about 9% of Indians think their personal finances would be excellent in the next 12 months and 65% consider they would be good.

    馃檪 馃榾

    “A stable economy has refurbished Indian outlook on the job market and their personal finances. Indians are relaxing their hold on money and are spending more than they were willing to spend in the last eight months,鈥欌 an expert from Neilsen quoted.

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    However, more or less consumer sentiments are positive all across the world, with the Global Consumer Confidence Index, rising to 82 points from 77 points in March.

    馃榾 馃檪

    Despite below average monsoon, India has emerged as the second most optimistic nation across the world in terms consumer confidence level, with a majority of people having bullish opinion about job prospects, personal finances and their willingness to spend in the next 12 months, a survey conducted by global consultancy firm Nielsen, said on Tuesday.

    According to the survey, consumer confidence in India is on upswing, registering a 13-point rise to 112 index points in the secondquarter, second only to Indonesia (113 points). 鈥淭he recent elections in India have had a positive effect on Indians鈥 sentiments towards its economy. With the UPA government back in power for the second-term, consumers are more confident that political and policy continuity will help recover the Indian economy,鈥欌 The Nielsen Company associate director (consumer research) Vatsala Pant said. The consumer confidence in India witnessed an uptrend on three parameters鈥攋ob prospects, personal finances and willingness to spend. In terms of job prospects, India ranked second after Indonesia. Over half of Indian consumers are optimistic that job prospects will either be excellent (13%) or good (55%) in the next 12 months.

    Regarding personal finances, Indians are the most optimistic globally as about 9% of Indians think their personal finances would be excellent in the next 12 months and 65% consider they would be good.

    鈥淎 stable economy has refurbished Indian outlook on the job market and their personal finances. Indians are relaxing their hold on money and are spending more than they were willing to spend in the last eight months,鈥欌 Pant said. When it comes to spending habit, about 4% Indians think this is an excellent time to buy the things they want and need, and 39% think it is a good time to buy things.

    Globally consumer sentiments are positive, with the Global Consumer Confidence Index, rising to 82 points from 77 points in March.

    Filing your income tax return? Remember 10 Steps For Sure !!

    10 must-do things while filing your income tax return

    With the due date of July 31 fast approaching, it is that time of the year again when the nation鈥檚 tax payers scramble to file I-T returns.

    After all, filing of tax return is compulsory for everyone whose gross total income exceeds the basic exemption limit.

    For financial year 2008-09, for instance, the basic exemption limit is Rs 1.80 lakh for women below 65 years of age, Rs 2.25 for senior citizens and Rs 1.50 lakh for males below 65 years.

    Thus, if your income for the year exceeded the exemption limit, you will be required to file the return by the due date. You need to file the tax return even if you are not paying any tax or even if your employer has deducted tax at source.

    Following are 10 important things to do before filing your I-T return:

    1) Ascertain your Income Sources

    Firstly, you need to identify your sources of income under different heads.

    Under the I-T Act, all incomes earned by persons are classified into 5 different heads,such as

    income from salary,

    income from house property,

    income from business or profession,

    income from capital gains and

    income from other sources.

    Thus, you should identify all your incomes from different sources, just to ensure that you haven鈥檛 missed out something while filing your return.

    2) Basic Documents check :

    Basic documents/information that should be referred to while filling the return include:

    # Form No 16 (issued by the employer): This shows the income from salary and tax deducted by the employer on the same.

    # Summary of all bank accounts during the year: This summary gives an idea about the income earned during the year, investments made and other expenses.

    # Details of tax paid during the year: This is required in case the individual has paid any advance tax during the year.

    # Income of a minor child: This is to be included (except in few cases) even if it is a small amount, e.g. bank interest.

    3) Determine Your Tax Liability

    Having identified your sources of income and after referring to the basic documents, you need to compute your tax liability for the year.

    If you are not familiar with the process, you should take the help of a tax expert or some other qualified professional.

    This is important as a wrong computation of your tax liability can land you in trouble later on.

    4) Pick the Right Form

    Once the details in respect of income and expenses are collated, you should check which tax return form is applicable to you.

    Based on the nature of income earned during the year, you should select the right income-tax form.

    For example, there are two I-T return forms – ITR-1 and ITR-2 鈥 available.

    Use the first form if your income is from salary, pension or interest earned in the financial year, and use the second one in case of any capital gain, income or loss from house property and income from any other source.

    5) Provide Exact Personal Details

    Ensure that you fill in correct personal details in the form meant for you, especially your name, address, bank account details and PAN number.

    Bank account details include the bank account number, type of account and the bank鈥檚 MICR code.

    6) Deductions Claims

    Ensure that you have, under various sections of the I-T Act, claimed all the deductions that you are eligible for. For example,

    a. Under Sec 80 C 鈥 For investments made like PF, PPF, NSC, school tuition fees of children, insurance premium, investments in specified mutual funds etc.

    b. Under Sec 80 G – Donations made to charitable organisations

    c. Housing deduction for interest on housing loan etc.

    7) Details of Investments done/ Exempt Income

    You also have to fill in information in respect of specified investments, as per prescribed limits, such as:

    • Property bought or sold in excess of Rs 30 lakh
    • Mutual funds, in excess of Rs 2 lakh
    • Cash deposits in excess of Rs 10 lakh
    • Credit card payments in excess of Rs 2 lakh
    • Bonds etc in excess of Rs 5 lakh

    8) Claim loss before deadline

    If you are planning to claim a loss in the income-tax return, which you would like to carry forward, the same can be done, only if the return is filed by the due date.

    If this filing deadline is not met, then the loss claimed would not be allowed to be carried forward for future set off against income.

    9) File By Due Date & In the Right Tax Jurisdiction

    After the tax return is filled in, the next step is to file it appropriately, by the due date. For individuals having salary and interest income only, the due date of filing the tax return for the financial year 2008-09 is July 31, 2009. The return may be filed either electronically or in printed form.

    One must also ensure that the return is filed with the right tax officer (tax jurisdiction). This is determined based on the address of the individual.

    The proof of filing the return is the acknowledgment, which is stamped and signed by the tax officer and a copy is returned to the individual.

    10) Keep Documents For Future References

    The documents based on which the return is prepared may be requested at a later stage by the Income Tax Officer to check the correctness of the claims made.

    Hence, it is advisable that all the documents required to substantiate the return are maintained by the tax payer for future reference.

    These are the few important points which you should bear in mind while filing your return.

    The golden rule is to be organised in your paper work and be timely in paying tax and filing the tax return. 馃檪

    Tax relief likely to boost commodity trading

    Growth in commodity trading over equity trading has been evident in recent years. Some market observers said removing tax on commodities trading, while retaining tax on securities transactions, may accelerate growth.

    Tax

    Jagannadham Thunuguntla, equity head of SMC Capital, said the Budget proposal could turn the focus of traders and arbitrageurs to commodities from equities. This may push up share of trading volumes significantly in commodities.

    Trading Share

    In 2007, the share of equities in the overall financial market transactions was 82 per cent and that of commodities was 18 per cent.

    This year the share of equities market has reached 63 per cent, but the share of commodities has shot up to 37 per cent.

    Ajit Day, who owns equity brokerage and commodity trading outfits, said the impact of removal of commodity transaction tax will be minimal as the rate of tax was much lower than that in the equities market.

    “Commodities’ derivatives market is still in its formative stage and dominated by speculative transactions. The linkages between spot market and derivatives commodity market are thin; there are many regulatory issues to be resolved too. So the growth of the two markets is strictly not comparable,” he added.

    KEY FEATURES OF BUDGET 2009-2010

    UNION BUDGET 2009-2010

    CHALLENGES

    To lead economy to high GDP growth rate of 9 per cent per annum at the earliest

    聲 To deepen and broaden the agenda for inclusive development to improve delivery mechanisms of the government.

    OVERVIEW OF THE ECONOMY

    聲 Growth rate of Gross Domestic Product dipped from an average of over 9 per cent in the previous three fiscal

    years to 6.7 per cent during 2008-09.

    聲 Whole sale price index rose to nearly 13 per cent in August, 2008 and had an equally sharp fall to zero per

    cent in March, 2009.

    聲 The structure of India鈥檚 economy changed over the last ten years with contribution of the services sector to

    GDP at well over 50 per cent and share of merchandise trade doubling to 38.9 per cent of GDP in 2008-09.

    聲 Recognising economic recovery and growth as co-operative effort of the Central and State Governments,meeting with Finance Ministers of States held as part of preparation of the Budget. This is intended to become an annual feature.

    Highlights of Union Budget 2009-10

    * Govt plans to bring back economy to high growth of 9%

    * GDP growth dipped to 6.7% in FY’09

    * FM to make pre-budget talks with state FMs annual affair

    * Fiscal deficit up from 2.7% to 6.8% of GDP

    * Return to fiscal prudence at the earliest

    * ‘Aam admi’ is focus of all programmes and schemes

    * IT exemption limit raised; Rs 15,000 for Sr.citizens

    * Limit raised by Rs 10,000 for tax payers, including women

    * 10% surcharge on personal income tax scrapped

    * Fringe Benefit Tax abolished

    * No change in corporate tax

    * Defence gets Rs 1,41,703 cr, up 34%

    * Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr

    * IIFCL to evolve mechanism for increased funding of infra

    * IIFCL to re-finance commercial bank loans up to 60 per cent in critical projects through PPP to tune of Rs 1,00,000 cr

    * Allocations for highways being stepped up by 23 per cent

    * Funds for housing, amenities for urban poor up Rs 3,973 cr

    * Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr

    * Assistance for storm-water drainage project up by Rs 300 cr

    * Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr

    * Interest rates incentive to farmers to repay loans on time

    * Additional Rs 1,000 crore for accelerated irrigation scheme

    * Export Credit Guarantee scheme extended till March 2010

    * 2% interest subvention (IS) scheme extended till March 2010

    * IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.

    * Commodity Transaction Tax abolished

    * New pension system trust exempted from STT; DDT

    * Minimum Alternate Tax hiked to 15% from 10%

    * Tax holiday on petro sector extended to natural gas.

    * 100% tax deduction on political donation * Stimulus for print media for another six months

    * Fertiliser subsidy to be nutrient-based, not price

    * Expert Grp to form viable pricing for imported petro goods

    * Banks and insurance firms to remain in public sector

    * Rs 100 cr one-time grant to expand banks in unbanked areas

    * Govt committed to provide Rs 100 a day as wages under NREGA

    * Allocation of Rs 39,100 cr to be made for NREGA

    * NREGA coverage increased to 4.74 crore households in FY’09

    * Work National Food Security scheme has begun

    * Allocation for Bharat Nirman being raised by 45 per cent

    * Rs 2,000 cr rural housing fund under National Housing bank

    * Mission for female literacy with focus on minorities, SC/ST

    * 50% of all rural women to be brought into SHG programmes

    * Full interest subsidy for students in select institutions

    * Five lakh students to benefit

    * Modernisation of national exployment exchanges

    * Action for social security to unorganised sector workers

    * New pension benefits for 12 lakh jawans and JCOs from July

    * One lakh dwelling units for paramilitary forces personnel

    * Unique Identification Card to citizens in 12-18 months

    * Provision of Rs 120 crore for UIC project

    * Rs 2,113 crore allocated for IITs and new IITs

    * Rs 3472 cr for Commonwealth Games from Rs 2112 cr

    * Customs, excise and service tax base rates unchanged

    * For Indira Awas Yojana, allocation increased 63%

    * IT returns to be made simpler

    * 8 missions being launched under Plan on climate change

    * Allocation for market development assistance scheme up 148%

    * Allocation for Rural Health Mission raised by Rs 257 cr above interim budget

    * Rs 500 cr for rehabilitation of Sri Lankan Tamils

    * Rs 1,000 cr for infrastructure in cyclone-hit area in WB

    * Total expenditure crosses Rs 10 lakh cr for first time

    * Share of direct taxes in revenue increased to 56% in FY’09

    However, the failure of Finance Minister Pranab Mukherjee’s Budget in slashing securities transaction tax, the status quo when it came to short-term capital gains tax, no substantial increase in exemption level for calculating personal income tax and no complete tax exemption on interest income earned by senior citizens was a huge letdown.

    I would rate this Budget at 5 on a scale of 1 to 10.

    India Inc calls for investment-oriented budget !

    India Inc calls for investment-oriented budget

    India Inc calls for investment-oriented budget

    In the forth coming Union Budget, which is scheduled on July 6, 2009, India Inc has asked for an investment-oriented Budget, besides demanding a cut in the direct tax rates for boosting the economy.

    Representatives of industry chambers CII, FICCI, Assocham and several other industrialists also wanted printing of more currency notes to finance the fiscal deficit, instead of going for market borrowing which squeezes money available for private investment.

    In the pre budget consultations with the Finance Minister Pranab Mukherjee, the industry leaders also sought fringe benefit tax removal and also demanded the raising of fund through disinvestment.

    “We talked about reducing corporate tax rates a bit… we also talked about bringing down personal income tax rates, if possible. We suggested that income tax exemption limit be raised from Rs 1.5 lakh to Rs 2.5 lakh or Rs 3 lakhs,” FICCI President Harshpati Singhania said.

    On the other hand, CII President Venu Srinivasan asked the government to print more currency notes to finance the fiscal deficit.

    He also said current borrowings, pegged at Rs 3.6 lakh crore should be monetised, so that private investment is not crowded out, and interest rates do not keep increasing. What we need is significant investment in infrastructure. Money should be raised through disinvestment.

    On FDI, Mittal said that it has been the corner stone of reforms and the government should invite more FDI in the country by making investor friendly environment.

    He said infrastructure should be given a fillip in every form. Specific to the telecom sector, there should be rationalisation of duty structure, he added.

    L&T CMD A M Naik said investment allowance should be reintroduced and income from foreign investment should be exempted from tax.

    The industry bodies further said the Budget should also focus on education and skill development apart from moderating corporate tax and raising depreciation rates for plant and machinery from 15 per cent to 25 per cent.