Tax ceiling for women, senior citizens to be raised to Rs. 2.5 lakh
New Delhi, Aug. 28 (JP) - The 50-year-old Income Tax Act with its many layers of incomprehensible laws and clauses will be revamped with the new streamlined Direct Taxes Code (DTC) that will come into force in the next Finance year.
The new tax code is expected to widen the tax base, put an end to unnecessary exemptions, moderate tax rates and finally add to the government’s revenues.
The DTC Bill, which has been approved by the Union Cabinet, will be placed before the Parliament on Monday.
The new tax slabs proposed in the DTC will raise the exemption limit to Rs. 2 lakh per annum against the current Rs. 1.6 lakh. For women and senior citizens, the exemption limit would be Rs. 2.5 lakh per annum.
Under the present IT Act, women have to pay a tax on an income of Rs. 1.9 lakh per annum or more while senior citizens have to pay a tax on income of Rs. 2.4 lakh.
A person earning Rs.10 lakh per annum would save Rs. 21,540 additionally each year when compared to the existing tax regime.
Similarly, women too stand to gain on the same income of Rs. 10 lakh per annum, as they will be saving around Rs. 23,450 while senior citizens (over 65 years) will save an extra Rs. 18,300 more.
Will companies hit MAT?
The DTC Bill, which will be vetted by the Parliament on Monday also seeks to impose Minimum Alternate Tax (MAT) at 20 per cent of the book profit, compared to 18 per cent at present. The corporate tax rate has come down from 40 per cent in 2000 to 33.22 per cent currently while MAT has inched upwards from 8.5 per cent to 19.93 per cent .
Meanwhile, Finance Ministry officials exuded confidence that the Bill will come into force by the deadline of April 1, 2011.
Saturday, August 28, 2010
Friday, August 27, 2010
How to battle against the "Blogger's tax"
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GO, BLOGGERS, GO.
An uproar on a so-called "blogger's tax" went a little viral earlier this week, when some bloggers got letters from the city asking for $300 to cover a business-privilege license.
The item became the subject of many other blogs, including libertarians and those on the far right who are using this as a way to promote the evils of big government.
We'd like to use the uproar, too, as a way to promote the idea of long-overdue reforms to the city's tax code, especially as it relates to business.
The fee in question is not a tax on bloggers; it's a fee for the privilege of doing business in the city, and it applies to all businesses no matter how much money they make. The problem is, if you make $100 from your blog, you're considered a business, and must have a license.
After that, it gets even worse.
The city will also impose a tax on any money your blog makes. That's because the city not only taxes profits, but also gross receipts. So it doesn't matter what you spend to make your blog viable. Whatever nickels and dimes you generate from advertising or other arrangements will also be taxed.
More than one proposal that could address this is rattling around. A 2009 mayoral task force recommended the city carry on its course to eliminate the gross-receipts portion of the business- privilege tax. But that won't happen for 15 years.
Meanwhile, Council members Maria Quinones- Sanchez and Bill Greene have their own proposal, which would actually increase the tax on business receipts but establish criteria that would exempt the first $100,000 of those receipts.
Both proposals deserve scrutiny. And we hope the latest howls from the blogging community will get people to focus attention on tax reform, especially since it's the first to fall off the table when serious fiscal problems hit. The city should have a regular mechanism for reviewing the tax code.
As the bloggers' outcry demonstrates, "business" is no longer limited to bricks and mortar enterprises; in fact, the idea of business is no longer always about making a sustainable living. Blogging in particular often combines commerce with free expression. Should such enterprises have their own tax category? Should we consider all revenue to be equal, whether it comes from a hard-goods manufacturer, service provider, or information technician? We encourage bloggers to keep this alive and get Council and Mayor Nutter to review these issues regularly.
An uproar on a so-called "blogger's tax" went a little viral earlier this week, when some bloggers got letters from the city asking for $300 to cover a business-privilege license.
The item became the subject of many other blogs, including libertarians and those on the far right who are using this as a way to promote the evils of big government.
We'd like to use the uproar, too, as a way to promote the idea of long-overdue reforms to the city's tax code, especially as it relates to business.
The fee in question is not a tax on bloggers; it's a fee for the privilege of doing business in the city, and it applies to all businesses no matter how much money they make. The problem is, if you make $100 from your blog, you're considered a business, and must have a license.
After that, it gets even worse.
The city will also impose a tax on any money your blog makes. That's because the city not only taxes profits, but also gross receipts. So it doesn't matter what you spend to make your blog viable. Whatever nickels and dimes you generate from advertising or other arrangements will also be taxed.
More than one proposal that could address this is rattling around. A 2009 mayoral task force recommended the city carry on its course to eliminate the gross-receipts portion of the business- privilege tax. But that won't happen for 15 years.
Meanwhile, Council members Maria Quinones- Sanchez and Bill Greene have their own proposal, which would actually increase the tax on business receipts but establish criteria that would exempt the first $100,000 of those receipts.
Both proposals deserve scrutiny. And we hope the latest howls from the blogging community will get people to focus attention on tax reform, especially since it's the first to fall off the table when serious fiscal problems hit. The city should have a regular mechanism for reviewing the tax code.
As the bloggers' outcry demonstrates, "business" is no longer limited to bricks and mortar enterprises; in fact, the idea of business is no longer always about making a sustainable living. Blogging in particular often combines commerce with free expression. Should such enterprises have their own tax category? Should we consider all revenue to be equal, whether it comes from a hard-goods manufacturer, service provider, or information technician? We encourage bloggers to keep this alive and get Council and Mayor Nutter to review these issues regularly.
Thursday, August 26, 2010
Sliced Bagels, Taxes on Top
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What's the tax on a bagel? It depends how you slice it—or in the case of New York, if you slice it.
In New York, the sale of whole bagels isn't subject to sales tax. But the tax does apply to "sliced or prepared bagels (with cream cheese or other toppings)," according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it's never been touched by a knife, it's also taxed.
Wednesday, August 25, 2010
Tax cut rollback proven to help
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Yes, if you make more than $250,000, according to the Democratic proposal your taxes will go back to where they were before the Bush tax cut. If not, they will not change.
The writer said, "We all know what happened when Clinton won the election." Yes, he restored the tax rates close to what they were before Reagan lowered them, and the Republicans screeched that it would cause a recession. What we got was seven years of the best economy, and lowest unemployment, in my 60 years.
We then got Republican control of everything, a huge tax cut for the wealthy, and a war in Iraq, all of which added $3.3 trillion to the debit. Did anyone complain about the debit? Put a Democrat in the White House, and it's a problem. Now that these cuts will expire, which could help the debit problem, no you can't do that, it might cause recession. Same thing they said in 1993. Did it happen? No. Check the history.
All of this doesn't really shock me. The wealthy and powerful control the Republican Party. The same party that gave us deregulation of the banks. Isn't that what got us in this clutter? They did it once before with the Savings & Loans -- remember that mess? Now these same people want back in charge. They say it's all Obama's fault, but the economy going into the ditch is why they are out of power. Why would someone be so gullible to believe the same lies over and over? Let's roll back the tax cut for the wealthiest 2 percent and see what happens.
The writer said, "We all know what happened when Clinton won the election." Yes, he restored the tax rates close to what they were before Reagan lowered them, and the Republicans screeched that it would cause a recession. What we got was seven years of the best economy, and lowest unemployment, in my 60 years.
We then got Republican control of everything, a huge tax cut for the wealthy, and a war in Iraq, all of which added $3.3 trillion to the debit. Did anyone complain about the debit? Put a Democrat in the White House, and it's a problem. Now that these cuts will expire, which could help the debit problem, no you can't do that, it might cause recession. Same thing they said in 1993. Did it happen? No. Check the history.
All of this doesn't really shock me. The wealthy and powerful control the Republican Party. The same party that gave us deregulation of the banks. Isn't that what got us in this clutter? They did it once before with the Savings & Loans -- remember that mess? Now these same people want back in charge. They say it's all Obama's fault, but the economy going into the ditch is why they are out of power. Why would someone be so gullible to believe the same lies over and over? Let's roll back the tax cut for the wealthiest 2 percent and see what happens.
Monday, August 9, 2010
Treasury Secretary Timothy Geithner argued on Bush tax cuts
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Extending tax cuts for the wealthiest Americans would imperil the fragile economic recovery, Treasury Secretary Timothy Geithner said, as the Obama administration pushes to let the Bush-era policies expire at the end of the year. The tax cuts should be extended for almost everyone. The exception is for married couples making more than $250,000 or a single person making $125,000 or more.
Geithner was justifying the administration's proposal to extend the George W. Bush tax cuts except for those making more than $200,000 a year. The Bush tax cuts for the middle class need to be extended, according to Geithner, to maintain incomes. However, long-term economic prospects require a signal that the federal government will get serious about its debt, so the rich need to pay more. Taking more from the rich won't be economically damaging, according to Geithner, because they are less likely to spend the difference.
The tax on dividends, for example, is currently 15%, but it could increase to as high as 39.6% if the 2001 and 2003 tax cuts expire. On top of this, a new 3.8% tax on investment incomes for high-income earners begins in 2013 to help pay for ObamaCare. The administration's arguments for higher taxes on capital center on fairness and the need for deficit reduction. Mr. Geithner argued that the wealthy tend to save more of their tax breaks than do other groups, so in letting their taxes rise; there would be minimal impact on economic activity.
If President Obama is interested in promoting growth now and in the future, he should commit to retaining the low tax rates Congress passed in 2003. A Treasury estimate shows the 10-year cost of extending the middle-class tax breaks is about $3 trillion. Extension of the breaks for higher earners adds $679.6 billion to the tab.
Geithner was justifying the administration's proposal to extend the George W. Bush tax cuts except for those making more than $200,000 a year. The Bush tax cuts for the middle class need to be extended, according to Geithner, to maintain incomes. However, long-term economic prospects require a signal that the federal government will get serious about its debt, so the rich need to pay more. Taking more from the rich won't be economically damaging, according to Geithner, because they are less likely to spend the difference.
The tax on dividends, for example, is currently 15%, but it could increase to as high as 39.6% if the 2001 and 2003 tax cuts expire. On top of this, a new 3.8% tax on investment incomes for high-income earners begins in 2013 to help pay for ObamaCare. The administration's arguments for higher taxes on capital center on fairness and the need for deficit reduction. Mr. Geithner argued that the wealthy tend to save more of their tax breaks than do other groups, so in letting their taxes rise; there would be minimal impact on economic activity.
If President Obama is interested in promoting growth now and in the future, he should commit to retaining the low tax rates Congress passed in 2003. A Treasury estimate shows the 10-year cost of extending the middle-class tax breaks is about $3 trillion. Extension of the breaks for higher earners adds $679.6 billion to the tab.
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