India’s economy will grow 6.1-6.7% in the financial year that starts in April, the government forecast in the economic survey, which was tabled in Parliament today, a day before finance minister P Chidambaram unveils the Union Budget 2013.
Slower growth has hurt the tax mop up this fiscal, which is significantly lower than Budget target, the Survey found. The economic slowdown is a wake up call for stepping up reforms, the Survey noted, adding that the current downturn is more or less over and the economy has started looking up.
Recent moves by the finance ministry tell us that personal ambition is getting the better of the reformer in Chidambaram.
Start with taxes. For some time now, Chidambaram has been saying that the rich must pay more taxes. Some of the renowned economists in this government—C Rangarajan, M Govinda Rao, etc—have also been hinting at the idea of plucking more feathers from the plumage of the rich. In principle, getting the rich to fork out more is fine. But in practice, without a coercive state apparatus, you are not going to generate more revenues by merely raising tax rates.
Idle Tax Slab:
No tax upto Rs. 3 Lakh
3 Lakh to 5 Lakh = 10%
5 Lakh to 15 Lakh = 20%
15 Lakh to 30 Lakh = 30%
30 Lakh above 35%
Conveyance Allowance limit to increase from existing Rs. 800 to 3000 - 50000 as per IT slabs. Rs. 800 limit seems to be from ages.
For HRA 40% - 50% criterion to be removed & kept 50% standard. Now a days many non metros propert vales are at par with metros.
Child education allowance to be changed to Rs. 1000 pm. Even it is impossible to education @ 1000 p.m.
Int on Housing loan deduction to be increased from Rs. 1.5 lacs to 3 Lacs. Almost 60% of salaried people are paying interest on home loan & Rs. 1.5 lac limit is very less and on other side rate of lending interest is keep on increasing.
Service Tax is higher about 12% & Excised 14 – 16%. Almost many services are taxed under ST & indirectly cost of living is increasing.
Service Tax to be reduced back to 10% if GST is not introduced.
Subsidy to be granted on CNG/ LPG & Fuel like Petrol & Diesel to bring down inflation rate.