The Indian Finance Minister is going to announce Union Budget 2010-11 on 26th February, 2010. Everyone is as eager to know the India Budget 2010 expectations as the final budget itself. The budget results 2010 are keenly awaited for several reasons. Some of these are:
- What measures will be taken up to tame high inflation rate, which has given rise to high prices of primary food articles and has caused fiscal deficit?
- How a balanced budget will be managed to cope up with rapid economic growth and the stagnancy seen in the below poverty level?
The common men and the corporates are looking for decrease in taxes. The Finance Minister is likely to augment exemption limit of individual taxes to ` 3 lakh from ` 1.60 lakh for salaried people. Exemption limit for women is expected to be increased from 1.80 lakh to 4 lakh and for senior citizen from ` 2 lakh to 5 lakh.
However, taxes levied on the perks availed by income earners are expected to be restructured on higher level. This arrangement may satisfy junior employees and senior citizens. But, it may not go well with the people belonging to higher position.
A reduction of 30% is expected in the corporate tax. The expectation is found in line with the introduction of Direct Tax Code (DTC) suggesting a 25% rate. The individual rate was lowered by 30% previous year also.
Capital Gains Tax:
As far as the 2010 India Budget expectation in the area of capital gain tax is concerned, finance minister is unlikely to bring any reform in this category of tax. It is predicted to be included under the Direct Tax Code, to be implemented from April 2011.
Re-fixing of Tax Slabs:
As mentioned earlier, the tax slab for women is expected to be revised to 4 lakh and senior citizens to ` 5 lakh. However, second and third slabs of tax would see significant change.
The second tax slab is expected to be augmented from the existing ` 3 lakh to ` 1 million to be taxed at 20%. The third slab is likely to be increased from ` 5 lakh to ` 25 lakh to be taxed at the rate of 30%.
These revisions would act in favor of the reputed advocates as well as the doctors.
The India Budget 2010 expectations show that significant revision in gratuity limit is also considered. The gratuity limit of the income class is expected to be raised to ` 10 lakh in the budget 2010 from ` 3.5 lakh. Both the upper as well as middle level executives will benefit a lot, if this revision is brought into effect.
Employees are paid gratuities in the government as well as corporate organizations during the time of their retirement. The amount that is dished out as gratuity falls outside the tax regime. If the gratuity limit is enhanced, the employees will surely benefit from it.
Self Assessment Slab:
The self assessment slab for businessmen and professionals is ` 40 lakh at present. According to expectations, the slab may be revised to ` 1 crore to lower the burden felt by the business people and professionals.
India Budget 2010 speculations suggest that it is not the right time for the government to roll back stimulus packages, despite the fact that GDP growth of the nation in the Q2 (July – September) of the current fiscal stood at 7.9%.
However, experts believe that government would withdraw few of the subsidies from the market. The oil companies were aided with the stimulus package to check loss. Government did not allow the Oil companies to raise product costs of kerosene and diesel, which would have forced the common men to pay more.
As high prices of diesel and petrol would bear adverse effect on the transport rates of food products, the stimulus packages are expected to continue in the oil industry. However, partial withdrawal of the stimulus aid can be expected in this sector to tackle the situation of increasing fiscal deficit.
Nevertheless, stimulus packages from engineering as well as export sectors are expected to be rolled back.
According to India Budget 2010 expectations, the agriculture sector would be the highlight of the session. This sector is likely to receive enormous boost from the government. Finance minister's invitation to the farmers for the pre-budget meet is held to be the main reason behind such speculation.
Infrastructure and Social Sector:
Infrastructure industry is also expected to be the focus of the budget results of 2010. Many believe that development in this sector would account for massive growth in GDP. However, it is unlikely to ease monetary policy to better infrastructure. Interest rate cannot be reduced as well.
According to 2010 budget speculations, the transportation charges for bulk commodities in railway industry are likely to be increased. The turnaround in the economic conditions of India is expected to boost the transport costs of cement, coal, iron ore and steel. Previous year, the Ministry of Railway refrained from raising transportation costs to help sector tackle the scenario of global meltdown. The ministry has not come up with its plan for hikes yet. But, the range can be fixed somewhere between 5 and 10%. If this becomes effective, one would need to pay ` 100 to 200 per tonne.
While taking into account the India Budget 2010 expectations of various sectors, it was found that the garment industry of India is looking for considerable cut in interest rates in its exports segment. The garment exporters also want the ministry to remove all the confusion faced in the case of excise as well as custom duties. The sector wants major commercial as well as fiscal relief. Similarly, the Indian tea industry is expecting to get an allocation of more than ` 130 crore, which was granted in the fiscal year 2009-10.
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