Abstract:
In this paper we will discuss the possible tax exemptions in the budget 2008 -09. The government may also remove the surcharge. Therefore, the corporate tax payers will have reason to cheer. The government may also relief taxes on investments.
The Finance Minister has clearly stated that in budget 2008-09, there will be a chance of less taxation. An increase in the limit of income tax exemption and a higher ceiling for those investments made to save taxes along with a re-equip in tax slabs are going to be some of the features in the budget 2008- 09. There are some good news for the corporate tax payers as well since the surcharge may be removed.
The Finance Minister is likely to increase the exemption on income tax limit to Rs 1,25,000 from Rs 1,10,000. However, there is a strong quest from all parts of the country to increase that figure to 150,000. The government may change the tax base as well.
This is the last budget of the current UPA government as election is knocking on the door. Direct tax collections have been smooth during 2007, claiming a growth of more than 40% to Rs 2,18,538 crores within the first ten months.
A hike of Rs 15,000 in the limit of tax exemption will make each taxpayer richer by one and half thousand rupees whereas a hike of Rs 40,000 will offer a tax relief worth Rs 4,000. The government officials said that the main aim of increasing the tax exemption limit is to pave the way for some savings in several sectors like infrastructure.
Therefore, the government may provide tax reliefs on investments through some dedicated funds and special infrastructure bonds. Recently, the government has escalated the basket of products that are eligible for tax exemption by introducing a senior citizen scheme.
The government is also thinking that if the present personal tax slab should be re-equipped or not. Those slabs have been introduced in 2004. Currently, those who are in the income bracket worth Rs 1,10,000 to Rs 1,50,000 have to pay 10% tax whereas for earnings between Rs 1,50,001 and Rs 2 lakhs 50 thousand, the figure is 20%.
The government is reexamining the 10% surcharge. The Finance Minister may also revise the pay scale of the government employees. However, in the last year budget, the government relieved the individuals with income less than Rs 10 lakhs and companies of income less than or equal to Rs 1 crore from the tax net.