Mar 16, 2012, 04.52 PM | Source: Moneycontrol.com
Businessmen hit below the belt with increase in service tax and excise duty rate. But widening of income tax bracket to provide a small breather.
Inflation has also taken it's toll on the financial planning of businessmen were looking up to the finance minister to announce some measures aimed at providing them much needed relief. He has widened the income tax bracket where general income tax exemption limit has been increased from Rs 1,80,000 to Rs 2,00,000.
The rates proposed for FY 2012-13 is as under:
- Income upto Rs 2 Lakhs – NIL
- Rs 2 Lakhs to Rs 5 Lakhs – 10%
- Rs 5 Lakhs to Rs 10 Lakhs – 20%
- Above Rs 10 Lakhs – 30%
The real benefit on the tax front is for anyone who has a higher amount of income as the 20% tax slab has been increased from Rs 8 lakh to Rs 10 lakh. Also a bonus point is the deduction of upto Rs 10,000/- on saving bank interests.
Many provisions which have adversely affected trade and industry in the past years failed to be addressed.
Raising the service tax and excise duty to 12% will hit us badly.
Branded garment is one of the businesses that have suffered the most in the last fiscal since it had to pay an additional 10.5% Central Excise Duty whereas the textile sector was exempted. Reducing the excise duty on readymade garments will be widely appreciated.
The finance minister's introduction of a negative list for service tax is a well defined list of services which are under the purview of it. Except for 17 services all will fall under the purview of service tax. Given the complexity of the service industry, businessmen are apprehensive that any such move will create ambiguity and result in genuine services having to suffer.
Doubling of infra tax free bonds to Rs 60,000 crore is a viewed as a big positive for us.
In the Budget, hike in excise duty to 12% has seen automobiles and other products including consumer durables leading to the burden being passed onto the consumer. On the whole, with excise duty going up, diesel cars, cigarettes, computers and mobile phones are all expected to get costlier now.