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Budget 2009 is finally out. Correction. A resurgent Congress’s Budget 2009 is finally out. Now that the dust has settled over this over-hyped event, we at relaxwithtax™ have attempted to present a clear view of how you stand impacted by some of the more relevant budget proposals.
1. Token Exemption – If you thought populist measures were high on the FM’s mind, then it was your imagination in overdrive mode. However, as an indicator of the government’s awareness that you do exist, there has been a small, not-really-significant enhancement in the threshold exemption limit that is meant to translate into tax savings for you & us. Hush, don’t attempt to protest. You may stand accused of being low on gratitude if you dare complain that such tax saved is a mere Rs. 1,500 (for Senior Citizen) & a paltry Rs. 1,000 (for others). Together, let’s thank the Good Lord Almighty for trifle mercies, at least.
TABLE SHOWING PROPOSED TAX EXEMPTIONS
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Category
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Exemption Increased By (Rs.)
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Zero Tax Status upto (Rs.)
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Senior Citizen
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15,000
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2,40,000
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Female
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10,000
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1,90,000
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Male
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10,000
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1,60,000
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2. Surcharge is history, for now – One of the positives to emerge out of this budget show. Good sense finally gets a chance to assert itself as seen in the proposal to phase out surcharge, beginning with elimination of surcharge of 10% from personal income tax. This levy was probably modeled on the protagonist in The Day of theJackal, because like him, when around, surcharge was a nuisance to society & you could neither identify with it or fathom what it was about; again like him, upon its imminent demise, there are sure to be no mourners. Surcharge RIP. (For everyone’s sake, let’s hope it does not do a Karzzz & revisit us in another form.)
3. Disability deductions – A classic example of how the FM gave but you were unable to receive. To the FM’s credit, he has extended the enhanced deduction in respect of maintenance & medical treatment of dependants with disability. To the dismay of those who were hoping to benefit from this, the proposed enhanced limit of Rs. 1,00,000 (as against the current limit of Rs. 75,000) is for individuals with severe disability ONLY. You may not have won, but you have not lost either because the limit for individuals without disability that is not severe has been retained at Rs. 50,000.
4. Cleverer but Versatile India – With a clear agenda of promoting all academic disciplines to counter the common tendency of placing exaggerated emphasis on a chosen few, the FM has broad based the eligibility of educational courses for tax breaks. As a student, you would now be eligible for deduction of interest paid on education loans on all fields of study (as against the earlier limited educational streams), including vocational studies pursued after schooling. No more would you have to depend on your dad to obtain funding to enroll for your dream course – one that would prepare you to become a participant in a reality show on television – maybe a roadie or a self-proclaimed actor / singer / dancer. Failing all of which, you could always end up becoming a judge.
5. Donate & flaunt your political leanings – A progressive measure that will usher in greater transparency in fiscal transactions in the political domain as well as in book keeping of the donors & the recipients. Contributions to political parties would now enjoy legal sanction; this would take the form of donations to electoral trusts that would act as conduits for political parties. Such donations would fetch you 100% deduction against your taxable income. Industrialists & other species of the we-are-wealthy tribe would now have to be careful about their exhibited political preferences. Political parties, on their part, will have to begin scouting for accountants who are also familiar with the double entry method of accounting.
6. Pulling the plug on FBT – The short yet irksome era of FBT or Fringe Benefit Tax has thankfully come to an end. To the relief of all affected persons, PM has abolished what PC had imposed. This is sure to make many FBT – Feel Better Today (& Tomorrow). The Feel Bitter Tax (as it was unpopularly referred to) has now become Finally Buried Tax.
7. Beware, yet another I-Tax Form – The FM has proposed to make the income tax forms simpler in the form of Saral 2. In the past, it has been observed that whenever a ‘simpler’ form is introduced, the user ends up dishing out more information to the tax department. Like Murali’s doosra, these simpler forms deceive you into believing that you know what you are doing.
8. We’ll believe it only when it happens – The FM has promised that with the setting up of the Central Processing Centre (CPC) of the tax department at Bangalore, processing of cases & refund would get speeded up. Haven’t we heard this one before? Hon’ble FM, many amongst us have been long awaiting their refunds. Refunds have increasingly begun to seem like pension money in that their arrival, whenever that may happen, is more than likely to coincide with our retirement.
9. New Pension System (NPS) – Exempt, Exempt, Taxed method of taxation to continue. As a result the receipts would be taxed in the hands of the investor. The silver lining though is that, income of the trust would be exempt from income tax. Also, dividend received by such trust to be exempt from Dividend Distribution Tax (DDT) and the Securities Transaction Tax (STT) would not be applicable to such trust on shares & securities transactions. These measures might improve the net returns to the investor.
10. Small & profitable – Small business owners, you have at least one reason to stop envying those big business enterprises. Small business owners have been freed from the need to maintain books of accounts & pay advance tax if they opt for the presumptive method of taxation. That will entail them to declare 8% of their turnover as taxable income and pay tax on such income. In return, their administrative and compliance hassles, it is portrayed, would get majorly reduced. Small, do we hear you say, is indeed beautiful.
11. Wealthy got wealthier – If you are not wealthy, you are advised to skip this point. If you are indeed wealthy, you may really not care about what is stated herein. All the same, it is our duty to point out that threshold exemption limit for wealth tax has been enhanced by an additional Rs. 15 Lakhs. Hence net wealth now to the extent of Rs. 30 Lakhs is not liable to be taxed.
Team RwT
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