Expectations of India’s Tax Budget 2010

A lot of people are expecting a 'pleasant' Budget considering that India is expected to achieve eight per cent gross domestic product (GDP) growth against the estimated growth of 6.9 per cent, and growth estimates across the manufacturing, services and agriculture sectors are promising.

The world economy also appears to be on the verge of recovery. The time may seem appropriate to offer significant tax breaks. Among all this, the following are a few expectations of tax payers which the finance minister needs to suitably address.

Wish list of 'corporate tax payers'

1. Abolition of surcharge
2. Tax exemption to STPI units: Currently the exemption is only up to financial year 2010-11 which is causing undue hardship to operating units. This hardship can be avoided by bestowing the benefits over ten years of operation rather than restricting the same to a particular year.
3. Abolition of wealth tax
4. Extension of Dividend Distribution tax (DDT) credit to multilayered structures
5. Non levy of TDS on service tax portion of the payments
6. Enhancement on monetary limits in tax audit, TDS etc
7. Introduction of specific guidelines on 'Profit attribution' and 'Association of Persons'
8. Right of appeal against orders under section 197 should be made appealable before Commissioner of income tax (appeals) to grant further right of appeal to tax a payer which is not available currently.

Wish list of 'individual tax payers'

1. Increase in housing loan interest deduction
2. Increase in limit of deduction under Section 80C includes Provident fund, ELSS, LIC, Housing Loan repayment etc and the existing limit is Rs 1,00,000.
3. Increased in exempted allowance to salaried class or re-introduction of standard deduction
4. Extension of eligible investments in Section 54EC provides for exemption in capital gains if the same is invested in notified government bonds.