The new budget to be presented in the parliament on March 16th is expected to bring few surprises. Here are some of those projected measures. Amnesty Scheme to track parallel economy Perhaps, the most desirable one is the launch of an amnesty scheme like VDIS to tap tax revenue out the gigantic quantity of black money existing in the country. On this front, the government should initiate supplementary actions to unearth unaccounted money parked in foreign countries. The VDIS 1996 has given Rs 10000 crores tax revenue to the government. Hence, now given the high fiscal deficit condition in the budget, the launch of an amnesty scheme will be fruitful. Direct taxes: Personal income tax expectations: Firstly, the exemption limit for personal income tax may be increased to 2 lakh rupees from the current level of 1.8 lakh rupees. Separate exemption limit for women may be removed. At present, women have a higher exemption limit of Rs 1.9 lakh rupees. Senior citizen’s exemption limit may also be increased by around 20k. Very senior citizen’s exemption limit may be kept intact. Though exemption limit is increased, the present rate structure may be retained. Corporate Income Tax expectations: There are expectations that the MAT may be removed from firms operating in SEZs. The present MAT rate of 18.5% may have made migration to the special economic zones unattractive. So the government sometimes may extend the sunset clause for the SEZs for a couple of years. In this year’s budget the government may give final shape to the much discussed national manufacturing policy. The manufacturing policy aims to create large integrated industrial townships – National Investment and Manufacturing Zones (NIMZs). So, there is high possibility that the government may make policy incentives to NIMZs in a sunrise manner in the present budget. Tax concession of various types may be expected if the relevant ministries including the ministry of labor have done their home work. Another area of tax concessions to the corporate sector will be the expenditure on R&D, where weighted deductions may be done. Indirect Taxes expectations for budget 2010-13: In the case of indirect taxes the government may raise both the excise duties and service taxes to 12% to continue the exit from the fiscal stimulus measures. The excise duty on diesel may be increased by one rupee per liter. In addition to this, an additional excise duty may be imposed on diesel cars based on the power of engines, rather than on the basis of length. Infrastructure sector expectations for budget 2012-13 A major attention is to be given to the infrastructure sector. The allocation to the sector may be increased by at least 20%. IIFCL and other infrastructure financing NBFCs may be allowed to issue tax free bonds. Allocation to the IIFCL for the take out finance scheme may be enhanced to Rs 30000 crores. Further, giving loans to the infrastructure may be added to the list of priority sector loans for the foreign banks. Agriculture sector: Credit allocation to the sector may be enhanced to 6 lakh crores. Further more incentive may be provided to live stock activities. Food Security: the budget may make a policy statement on food security bill. Token funds may be provided for the introduction of the food security bill. In an extreme case, food security act’s financial introduction may be made in this budget making it as the biggest populist event of budget 2012-13. The general feature of the budget for 2012-13 may be that it will be constrained by high fiscal deficit of the current year and revenue constraints for the coming year. In the absence of tax concessions and expenditure extravagances, the budget may not be a big positive event for the corporate sector. The stock market also may accommodate the budget with downward corrections, unless it settles with early negative corrections in the previous days of the budget.
Home News Updates Expectations of Union Budget 2012-13