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The count down for the Budget 2013 has started. Budget Session of Parliament is to begin on February 21 with President Pranab Mukherjee's first address to the joint sitting of the Lok Sabha and the Rajya Sabha. Finance Minister P Chidambaram will present the General Budget on February 28. The Railway Budget will be presented on February 26. The budget comes ahead of crucial state elections as well as this could be the last full budget of the current Lok Sabha.
The pre-election budgets in the country always use to be populist one with lot of freebies rolled out. Before the last LokSabha election, in 2009 we have seen the Rs 60,000 crore farm loan waiver announced. We have seen tax rate cuts earlier.
But what is there in store for this year. We have seen the government going aggressive on reforms. For the railway we have already seen a ticket rate hike and news is out that one more hike in on the anvil. The mood of the government gives us little hope of a friendly budget. There may not be any significant tax cuts or slab changes. Various unions have been pressing for raising the tax exemption and bringing the annual income amounting to Rs.5 Lacs may be exempted from income tax. The real estate sector is pushing for income tax exemption limit of 4 lac for the housing loan. Life insurers are urging the government to introduce separate tax deduction for investments in retirement savings outside the Rs 1 lakh deduction that is currently available under Section 80C. Thats that every one wants sops.It is evident and fact that business men and industrialists have lot of options to manipulate the figures and pay much less income tax. However the common middle class salaried person has no option but to pay the tax. Government is also aware of all the facts so instead of burdening the common man for the benefits to the exchequer the Finance Minister must design and bring out some innovative steps to get the tax out of the big fish. 80% of the Income Tax in India is collected from the salaried middle class.
There are opinions that there will be some rejigging in the income tax slabs in line with the original DTC, whereby the 10 per cent and 20 per cent slabs may be extended.
The government might impose a surcharge on income tax on the “super rich”; and, an option being considered is bringing individuals with taxable income of over Rs 1 crore within its ambit.
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