Some relief in Budget 2011-12 (Income Tax) & FM not in the mood to cut income tax rates

Dear Viewers,
For the benefit of all concern, we publish here under some important news :-

Some relief in Budget 2011-12 (Income Tax)


At present the maximum limit u/s 80C is Rs. 1,00,000/- with an additional limit of Rs. 20,000/- under Section 80CCF. The tax exemptions for savings is received under section 80C of the Income Tax Act while the special window of Rs 20,000 investment in infrastructure bonds is available under section 80CCF (Total of Rs. 1,20,000/-).To give some relief to common man battling rising prices, finance minister Shri Pranab Mukherjee is expected to raise the exemption limit on annual savings of an individual in the upcoming Budget.

The savings exemptions may be raised in the Union Budget 2011-12 from the present Rs 1 lakh. In 2010-11, the finance ministry allowed an additional exemption of Rs 20,000 for investment in long-term infrastructure bonds.

Shri. Mukherjee is expected to raise the Rs 1 lakh exemption limit by another Rs 20,000 in the Union Budget in February, a Cabinet minister told FE. Besides pushing up the savings rate, this would align the current income tax regime towards the proposed Direct Taxes Code (DTC).

“This year is going to be an year of consolidation towards DTC,” a top official in the finance ministry had said recently. In the DTC, the government has proposed tax exemption on annual savings of up to Rs 1.5 lakh.

The tax exemption for savings limit of Rs 1 lakh when increased, will give an additional cushion to the common man who is grappling with price rise already. Tax experts also feel that there is a case for to raising the savings exemptions limit as the current exemption was prescribed long back. Last year, Planning Commission had suggested to the finance ministry that savings exemption limit can be raised to Rs 1.5 lakh.

FM not in the mood to cut Income Tax Rates

Those looking for income-tax relief in the forthcoming Budget to fight rising food prices are likely to be disappointed. Taxpayers can expect some relief from high inflation in Budget 2011-12 as the government may raise the income tax exemption limit for individuals.

Tax incentives to software companies under Sections 10A and 10B are set to continue next year, with a change in the basis of benefits from profit-linked to investment-linked. There were indications that Sections 10A and 10B would continue, but there was no clarity on whether it would remain profit-linked in 2011-2012 or would change to being investment-linked.

Moreover, they said, as the government is committed to raising the income tax exemption limit from Rs 160,000 per annum to Rs 200,000 in line with the Direct Taxes Code in 2012-13, tax payers could expect at least some relief in the upcoming Budget on February 28.
Currently, the exemption limit is Rs 1.6 lakh (Rs 160,000) and considering the fact that inflation is running at around 10 per cent, an increase of 10 per cent in the exemption limit could be expected in the upcoming Budget. This would mean that the exemption limit would probably be enhanced by Rs 15,000 to 1.75 lakh (Rs 175,000).

This step would result in a revenue loss of around Rs 4,000 crore (Rs 40 billion), said the official, adding that this would mean a Rs 1,500 tax benefit a year to the taxpayer.

He said that the increase in the exemption limit would also be a step towards aligning the tax structure with DTC, as the exemption limit under the proposed regime is Rs 2 lakh (Rs 200,000) a year. DTC is expected to come into effect from 2012-2013.

The Direct Taxes Code Bill, 2010, was introduced in the Lok Sabha on August 30 last year and it was proposed to implement the Code from April 2012.

The Income Tax Department had chalked out a plan for the preparation and its implementation from next year, said the official. A few changes due to political compulsions, however, should not be ruled out completely, said the official.

The department is focusing on developing an integrated technology platform to ensure a smooth transition to DTC from the existing Income Tax Act. The Code offers an opportunity for the Income Tax Department to integrate its people, process and technology through an integrated technology plat form.

In view of the economic recovery, Mukherjee had started the process of withdrawal of stimulus by raising tax rates in the 2010-11 Budget.

With the economy recording a growth rate of 8.9 per cent in the first half of the current fiscal, Mukherjee is expected to further withdraw the stimulus with a view to reduce the fiscal deficit, which is expected to be about 5.5 per cent of the gross domestic product in 2010-11.

* * * * * ..Editor

IRDA ISSUES DRAFT M & A GUIDELINES FOR NON-LIFE INSURANCE COS.

Dear Viewers,

Insurance Regulatory and Development Authority (Irda) today released a framework for amalgamation of non-life insurance companies to ensure smooth functioning of the sector.

Insurance Regulatory and Development Authority (IRDA) has issued merger and acquisition (M&A) guidelines for non-life insurance companies, reports CNBC-TV18.

According to the guidelines companies are required to submit intent letter two months prior to application and also explain the rationale behind the proposed merger. The merger proposal is required to be send to all policyholders. However, approval from Foreign Investment Promotion Board (FIPB), Reserve Bank of India (RBI) and IRDA is mandatory.

IRDA also says that application fee for non-life insurance M&A will be one tenth of the gross written premium. Fee will be in the minimum bracket of Rs 50,000,00 to Rs 5 crore.

--- editor

FLASH NEWS - PTS TO FTS, HIKE IN HALTING ALLOWANCE ETC,,,,,

Dear Friends,

The Board of  New India Assurance Company has given their nod on the following matters:

1. Payment of arrears to all PTS, due to Wage Revision.

2. Upgradation of all Part Time Sweepers as F.T.S.in a phased manner.

3. Increase in Halting Allowance to employees on Official tours.

Pursuing for clearance for few more non-core benefits, likely clears shortly.

With Warm Greetings,

Yours-in-Service,

M. Hanumantha Rao                 T. Gopalakrishna

                           PRESIDENT                  GENERAL SECRETARY