The new Union Budget was placed on 26th February, 2010 by the Hon’ble Finance Minister

Shri Pranab Mukherjee. The new budget has given the thrust for improvement of economy and facilities in rural sector. Various amendments which have been proposed in Direct and Indirect Tax laws, shall have the far reaching effects. In case of individual, relief has been given by broadening the current tax slab as follow :

The proposed broadening of tax slabs will provide substantial relief to a large number of taxpayers.

The Finance Minister also reduced the Surcharge in case of a company from 10% to 7.5%. However, the rate of tax in case of companies paying MAT u/s 115 JB, has been increased from 15% to 18%. This will increase the incidence of tax on some of the companies who are liable to pay MAT. AIFTP has given representations from time to time to the Finance Minister and CBDT Chairman and out of that, following amendments are proposed in Finance Budget, 2010 :

• The limit of Tax Audit from Rs. 40 lakhs to 60 lakhs in case of business income and Rs. 10 lakhs to Rs. 15 lakhs has been increased in case of professionals;

• The monetary limit of TDS has been increased;

• Amendment has also been proposed for depositing the TDS before the due date of filing the Return and allowability of expenditure.

The Finance Minister has also given an indication for amendment in Direct Tax Code and to consider the suggestions made by various professionals, trade and industries. Indication has also been given for GST and proposed that GST will be applicable from 1st April, 2011. Necessary amendments in Constitution for implementing GST have not been made till now and consensus from the States on rate of tax and procedure of claim of ITC are still under consideration. After Constitutional amendments and discussions with various State Governments, the way for implementing GST w.e.f. 1-4-2011 will be hassle-free. We are of the view that the GST Act and Rules, rate of tax, exemptions, forms, procedure, should be the same all over the country and powers of the States for amending the rate of tax should be restricted by the Empowered Committee. The decision of the Empowered Committee with regard to the implementation of VAT has not been properly honoured by the various State Governments. Under VAT the agreed rate of tax was 4% on some commodities and RNR was decided 12.5%, but most of the States have increased the rate of tax from 4% to 5% and the general rate of tax (RNR) has also been increased from 12.5% which is not a good sign for development of trade and industry. According to the VAT law, the refunds are to be issued timely to the tax-payers in case of export and against the excess Input Tax Credit, but we are receiving complaints from various parts of the country that the authorities are not issuing the refundable amount timely and working capital of the assessees is blocked and they are suffering heavy burden of interest. The same thing should not be repeated in the GST regime to maintain the confidence and trust of the tax-payers.

Advocates, Chartered Accountants and Tax Practitioners as a whole and associations in particular should make efforts for giving suggestions for simplifying the procedure in reference to proposed Direct Tax Code as well as GST.

With good wishes,

M.L. PATODI
National President