MINIMUM 30 LAKH NEEDED TO BE CALLED' WEALTHY'

The government today doubled the threshold for calling a person or entity wealthy, saying the wealth tax would be imposed only on those having a net wealth exceeding Rs 30 lakh. Under the existing provisions, wealth tax is charged on "every individual, Hindu undivided family and company at the rate of one per cent" of the amount by which their net wealth exceeds Rs 15 lakh. However, Finance Minister Pranab Mukherjee today proposed to amend the relevant section of the Wealth Tax Act. Pursuant to this, for every year commencing on and from April 1, 2010, the one per cent wealth tax will be charged on the amount by which the net wealth exceeds Rs 30 lakh. Besides, the Finance Minister has also proposed to amend certain provisions related to agreement for avoidance of double taxation with respect to wealth tax.

INCOME TAX EXEMPTION LIMIT INCREASED

With a view to providing interim relief to small and marginal tax payers and senior citizens the budget 2009-2010 has increased the personal income tax exemption limit by Rs 15,000 from Rs 2.25 lakh to Rs 2.40 lakh for senior citizens. Similarly it has aslo raised the exemption limit by Rs 10,000 from Rs 1.80 lakh to Rs 1.90 lakh for women tax payers and by Rs 10,000 from Rs 1.50 lakh to Rs 1.60 lakh for all other categories of individual taxpayers. Further, it has also increased the deduction under section 80-DD in respect of maintenance, including medical treatment, of a dependent who is a person with severe disability to Rs 1 lakh from the present limit of Rs 75,000. In the past, surcharges on direct taxes have generally been levied to meet the revenue needs arising from natural calamities. The Government has set up the National Calamity Contingency Fund to build up resources to meet emergency situations. As a corollary, surcharge on direct taxes should be removed. However, this has to be balanced with the revenue needs of the Government. Therefore, the budget has phased out the surcharge on various direct taxes by eliminating the surcharge of 10 per cent on personal income tax. There is no change in corporate taxation. Deduction in respect of export profits is available under sections 10A and 10B of the Income-tax Act. The deduction under these sections would not be available beyond the financial year 2009-2010. In order to tide over the slowdown in exports, I propose to extend the sun-set clauses for these tax holidays by one more year i.e. for the financial year 2010-11. The budget has aslo abolished the Fringe Benefit Tax that wa sintroduced in the Finance Act, 2005 on the value of certain fringe benefits provided by employers to their employees.

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