Friday, February 26, 2010

Budget 2010

Budget 2010
Yesterday evening I was at the Gandhinagar market, interacting with local traders in connection of renovation of our site and publishing of business directory of wholesale and retail shops in the Gandhinagar (one of the biggest wholesale market in south Maharashtra) Kolhapur. As it was only a day before, Mamta Didi has presented rail budget so a few people asked me about my participation in the budget related program “Public Ka Vitmantri” telecasted on Zee business and Zee News two years back in February 2008.
This has prompted me to write something more on the budgetary proposals in the light of changed economic conditions of developing country like India, though I know that this is quite late, as few hours from know Indian Finance minister will raise to present Finance bill and read out his budget proposal in the parliament so this is almost impossible for him even thought about my suggestion but surely these suggestions might prove handy for the future budgets of country and this temptation is forcing me to write all this.
Suggestion [1] Roads & Highways
If you are on tour of Maharashtra certainly you will enjoy the status of roads and highways, the only head ache is that if you are driving your own vehicle after every 100 odd Km’s you have to stop for paying toll tax which not only proves hurdle for enjoying the driving but also proves instrumental for misbalancing your travel budget. This toll tax is applicable on the most of national and state highways through out India. If I have been finance minister surely I have proposed to abolish this toll tax by imposing additional road tax duty on new vehicle registration as follows Two wheelers Rs. 500Three Wheelers Rs. 250Four Wheelers (Personal Use) Rs. 2000Four Wheelers (Public Use) Rs. 1000Mini Bus & Mini Trucks Rs. 2500Bus & Truck Rs. 5000This amount will not only meet with the revenue collected from the toll tax but also prove sufficient to spare a decent amount for the maintenance of present roads and funds for the development of future roads.
Suggestion [2] Tobacco, Alcohol & Health
Since past few years government is appearing very much cautious about the public health and proving harsh for the consumption of tobacco & alcohol. Considerable decent amount is being allotted for educating people about the disadvantages and health hazards of consuming tobacco and alcohol. In my personal view this is not just crime but eventually a sin, especially when we take in consideration that many Indian villages don’t have primary health facilities. I suggest that no expenses should be allowed for educating people about health hazards generating from the consumption of tobacco and alcohol. Instead of that these products must be taxed with such high rates that they should go beyond the buying powers of common citizen, for instant presently one cigarette is casting about Rs. 2, an additional duty of Rs. 18 should be posed to make it available for Rs. 20. This additional amount should be utilized in providing better free medical facilities to villagers.
Suggestion [3] Taxes
This is the most important and much awaited part of budget speech of finance minister because this has powers of affecting day to day life of common people.
My first suggestion is related with indirect taxes; under the waves of globalization this is common fact that in the most of world markets there is competition between the local commodities and imported goods. Unfortunately we Indians have an attitude of buying imported goods just because over the centauries we have been educated that these are better quality products but time has proved that goods manufactured in India are meeting with world standards of quality. I suggest that import duty on the commodities manufactured outside of India must be 10% higher that what excise duty is applicable on the similar product manufactured in India. However if the manufacturing company starts a plant in India, imports raw material and manufacture goods in India, this additional import duty must be adjusted with the excise duty. For example if the Lenovo or Dell is establishing a unit for assembling laptops in India, company must be allowed to pay import duty equivalent to Indian laptop assembling company, but in case of ready to use laptops Lenovo or Dell must pay 10% higher import duty.
Considering the agricultural based economy of India, I am suggesting imposing 1% income tax on the sale value of cash crops like Cotton and Sugar cane; this must be deducted at the factories. Similarly many fruits are exported to other countries either in raw form or as the processed product, I suggest imposing 10% income tax on sale value of these if exported in raw form and 1% on processed products.
Now I am turning to my suggestions related to direct tax. My suggestions are:
Salaried Person
1] Income including investment benefits up to Rs. 3 Lakhs No Tax
2] From Rs. 3 to 5 Lakh 8% [Max Rs. 16000]
3] From Rs. 5 to 7 Lakh 9% [Rs. Rs.16000 plus 9%]
4] From Rs. 7 to 10 Lakh 10% [Rs. 34000 plus 10%]
5] Rs 10 Lakh & Above 15% [Rs. 64000 plus 15%]
Business Income
In our country business houses, companies and traders are allowed to pay income tax after deducting expenses from the Gross profit. In most of cases this system is reducing net profit to just 2 - 4 % of sale turnover and in some cases even less than 1%. This creates space for corruption whiles the assessment of tax. I am suggesting tax structure based on the Gross Profits. I will also raise the limit of getting account books audited from present 40 Lakh to 60 Lakh. Retail shop owners with annual sale of Rs.12 Lakh or lesser will be allowed not to keep account books, provided they pay Rs. 3000 as income tax.
1] Gross Profit Less than Rs. 3 Lakh No Tax
2] From 3 Lakh to 10 Lakh 5% [From Rs. 15000 to Rs. 50000]
3] Above Rs. 10 Lakh 8% [Rs. 50000 plus 8%]
Manufacturers & Companies
1] Gross Profit Less than Rs. 10 Lakh 2%
2] From 10 to 24.99 Lakh 4%
3] From 25 Lakh to 49.99 Lakh 6%
4] From 50 Lakh to 99.99 Lakh 8%
5] 100 Lakh & above 10%