EXPECTATIONS: BUDGET 2010-11
By:
Dr. Navin C. Agrawal, Chartered Accountant
Union Finance Minister Mr. Pranab Mukherjee is going to present Annual Budget 2010-11 in the Parliament on 26th February 2010. The nation is looking up to the Finance Minister to propose a budget because every citizen has some expectations and expects the UFM will bring out some solution to their problems. Budget defines the basic outlook & prime concern of the Government, which affects the citizens & Business house in multiple ways. Budget gives a focused direction to the economy of the nation, leading it towards growth & prosperity. It is believed that the public representatives namely, members of parliament understand the needs of public and put it forward as the annual budget.
6th Pay Commission having been implemented has considerably added to financial burden on the government. In the year 2009-10 elections have taken place consequently, there is increase in non-productive expenses. Therefore, there is a need to collect the financial resources without giving a pinch to the government. Keeping in view expectations of public tax like Fringe Benefit Tax (FBT) have been abolished. In the present scenario every class is affected by the price rise. The prices of the essential commodities like sugar, pulses have unexpectedly increased. It is expected from the UFM that through the budget he will take up certain concrete measures to control the prices.
UFM has presented the new Direct Tax Code for discussion and suggestions thereafter through out the country. The object of such code was evident that it is going to replace the Income Tax Act 1961, the Wealth Tax Act 1957 etc. The Direct Tax Code has simplified, rationalized & used the latest technology in implementation of the Act. This code was supposed to be presented in the winter session of the Parliament but it could not be done. Now it is expected that the provisions of the code will be implemented at the earliest.
Goods & Service Tax (GST) is likely to be introduced as new indirect tax policy in the country. This policy was announced to be introduced with effect from 1st April 2010. However keeping in view the preparations it is not likely to maintain its schedule. It will be worthwhile if UFM is able to fix up the date for its implementations after securing concurrence from the states. There is likelihood that with the introduction of GST the prices of goods as well as services are likely to go down. Although the tax rates will go down but such reduction shall be compensated by increasing its coverage and maintain the requirement of revenue.
This is true that keeping in view the position of our foreign exchange we joined World Trade Organisation (WTO) and adopted policies of globalisation & liberalisation. In this context it is generally seen that foreign capital (FII and FDI) is responsible fluctuations in the stock market. It is expected from the UFM that fluctuations in the stock market shall be controlled. It is also expected to control the outflow of the foreign capital.
It is expected that in the governance of the country the latest technology should be used so that benefits of various schemes should reach the common man. Of course it is requires constitutional amendments. It is expected from UFM that he will make some announcement in this regard.
So long as the Direct Tax Code is not going to be implemented some amendments should be made in the Income Tax Act like maximum exemption limit should be increased, the limit of deduction under Section 80C for investments should be increased, the procedure of issuance of refund should be announced by the UFM through the budget. The exemption limit for gratuity should also be increased. The agricultural income should be brought into tax net. This will require marketing for and on behalf of the government as none of the farmer will come in the tax net. Since presently, maximum exemption limit is Rs.1,60,000 and none of the farmer earns so much of amount.
Keeping in view the economic development of our country and huge expenditure involved in contesting the elections some requirement regarding being the tax payer should be laid down and if so required the constitution should be amended.
Keeping in view the rich experience of UFM it is expected that UFM will bring certain concrete proposals, which will provide benefits to the common man. At the same time budget should make every citizen happier than before.