Govt may up tax exemption cap

Limit May Be Increased To Rs 1.75-2 Lakh In The Forthcoming Budget

New Delhi: The full budget to be presented by the new Congress-led UPA government in the forthcoming session of Parliament to begin sometime next month may come packed with some concessions for the middle class by way of raising the tax exemption limit to Rs 1.75-2 lakh from Rs 1.50 lakh.
    The other benefit in the direct tax segments could be withdrawal of the Fringe Benefit Tax. If through, both these measures will result in a tax outgo of around Rs 10,000 crore. Proposals in this regard are under consideration, a senior official in the finance ministry said.
    Raising of the tax exemption limit along with the withdrawal of FBT will act as another stimulus since the large middle class population will be left with more money in hand, especially at a time when the government is likely to release the remaining 60% salary arrears of the 6th Pay Commission.
    The removal of FBT has also been mooted by the commerce ministry. It had also sought continuation of interest rate subsidy while seeking to further raise it from the existing 2% to 4%.
    Sources in the finance ministry said there is no scope for any further cuts in excise duty, customs or service tax as the indirect tax collections had slipped into negative domain towards the end of the last fiscal.
    With the widening fiscal gap, it is equally important for the government to keep its revenue stream rejuvenated to fund its developmental and social schemes.
    The commerce ministry is backing industry's proposals for extending tax sops to export-oriented units, besides the continuation of interest rate subvention till March 2010.
    In their proposals to the finance ministry, industry chambers had asked the government to include measures in the budget that would promote investment and create additional demand.

Vote-on-account needed if no budget by Aug 1: Chawla TIMES NEWS NETWORK New Delhi: Indicating that government has little time in hand to finalise a full budget for the 2009-10 fiscal as it has to be passed by Parliament before August 1, finance secretary Ashok Chawla on Wednesday said that in case of a delay another vote-on-account may become necessary. Though finance ministry officials have initiated budget preparations by calling in for proposals from industry chambers, the process lacks authority in the absence of any executive head as the new government is yet to be constituted.
    "Unless you have a finance minister in position, unless the political executive and the Cabinet decide the date by which they want the budget to be ready, it's very difficult for us to commit on the budget day,'' Chawla said. The interim budget passed by Parliament in February is valid till July 31. For expenditure after that, the government would have to take the permission of Parliament either through the passing of a full budget after a debate or another vote-on-account.
    "If it is not possible to pass a full budget (by August 1) we need a voteon-account for another short period beyond that,'' Chawla added.
    The Congress had promised to bring a full budget within 45 days of forming the new government. Even if it is able to present the budget by mid-July, there will be little time left for a debate in both Houses of Parliament.

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