A moderate approach in difficult times
The budget has been presented in particularly challenging times — and not all challenges from the economy. Fiscal deficit and high inflation continue to be the twin evils plaguing the country.india Updated: Mar 17, 2012 00:02 IST
The budget has been presented in particularly challenging times — and not all challenges from the economy. Fiscal deficit and high inflation continue to be the twin evils plaguing the country. Nevertheless, India continues to be a growth economy in the global scale of things, albeit at a sluggish rate.
The finance minister has spoken of tabling a white paper on black money in Parliament. Interestingly, he has introduced several provisions in the Finance Bill aimed at curbing tax evasion by making certain disclosures mandatory.
A few highlights of the budget:
The exemption limit for taxable income has been raised to Rs 200,000 from the existing Rs 180,000. There is relief at all slab levels, as explained in the report above.
The Rajiv Gandhi Equity Saving Scheme introduces marginal relief on short-term capital gains for investments in equity market of up to Rs 50,000. This scheme would apply to individuals earning an annual income of less than Rs 10,00,000. Other marginal reliefs proposed include exemption on deduction of Rs 5,000 for preventive health check-ups. Individuals earning a salary income of Rs 5,00,000 and interest of Rs 10,000 are not required to file tax returns.
Though the budget promises relief to the common man with a little saving in the direct tax rate, he will end up paying more taxes than before — on services and goods!
There is no change in the tax rate here. A key proposal on cross border transactions is the introduction of anti-avoidance rules that target transactions designed to avoid tax. Advance Pricing Arrangement is being introduced with the objective of reducing tax disputes on transfer pricing adjustments and providing more clarity to taxpayers.
There is a plethora of retrospective amendments aimed at nullifying various judicial precedents that provided relief to non-resident investors. On the whole, the finance minister struck a moderate balance, but retrospective amendments could have other ramifications and could have been avoided.
M Lakshminarayanan, Partner, Deloitte Haskins & Sells