Government raises income tax exemption limits; incentive for farm, exporters  

July 6, 2009

The government Monday announced a slew of tax sops, including an additional Rs10,000 personal income tax exemption and scrapping of 10% surcharge, while announcing cheaper loans to farmers and incentives for export and infrastructure to attain nine per cent growth, reports PTI.

In tune with the poll promises made by the Congress and reflecting the pressures of the global financial crisis, Finance Minister Pranab Mukherjee presented the Budget for 2009-10 that contained a series of measures that could be termed popular.

Beginning with incentives for individual tax payers that included an additional exemption of Rs15,000 for senior citizens and Rs10,000 for women and others, Mukherjee also abolished Fringe Benefit Tax that could ease pressure on employers in giving benefits to the workers, but there was no change in corporate tax as also the rates for customs, excise and service tax.

Attaching the highest priority for infrastructure, where government institutions and banks could finance Rs1.0 trillion for projects in addition with private flow, Mukherjee said that the present conditions and uncertainty about global recovery would make it difficult for him to focus on fiscal deficit which would shoot to 6.8% from 2.7% last year.

He said additional revenue would be mobilised through disinvestment of government equity in public sector undertakings and other steps, but said that interest payment alone would be over Rs3 trillion largely on account of the burden of stimulus packages announced last year that helped the economy grow by 6.7%.

However, he said that government would have the ownership of banks and insurance companies even as disinvestment takes off while reiterating that state holding in these entities would be at least 51%.

Mukherjee also announced a number of sector specific incentives, particularly for those that promote employment, and announced a hike in provision for flagship schemes like NREGA by 144% to Rs391 billion and said that government would also provide a minimum of Rs100 a day under the job guarantee scheme.

Dinesh Thakkar, chairman and managing director, Angel Broking said: "Amongst the many shortfalls in the Budget, it was silent on the timeline for tackling the Fiscal Deficit position of the country, and the Reforms process announcements expected from it which would have aided in handling the fiscal situation of the government." –Yogesh Sapkale [email protected]