- Team Orbis Economics
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Below are details of how the
Budget’s tax related announcements can impact you:
Income
Tax: In a bid to increase revenue collections, the government has decided
to increase the tax liability of the ‘super-rich’ by imposing a surcharge of
10% on individuals and entities whose income exceeds Rs. 1 crore for a period
of one year. If you fall under the sole-proprietorship category or partnership
firm, this will mean an increase in the amount of tax you need to pay, since
the law does not distinguish between the firm and the owners as distinct entities.
By the same token if your entity’s income is less than Rs. 5 lakh, you can now
avail of a tax credit of Rs. 2,000.
Corporate
Tax: If your business income exceeds Rs. 10 crore, there has been an
increase in surcharge by 5 percentage points on income to 10%. This will impact
after tax earnings negatively, but the good news is that much like the
surcharge on income tax, this too is for a period of one year only.
Excise
Duty: If you function in the readymade garments sector, there is good news
for you, with ‘zero excise duty’ now applicable at specific stages of
production. Similarly, if you are in the handmade carpets or producing textile
floor coverings of jute and coir, you are exempt from excise duties.
Service
Tax: If you are a service tax
assesse but have failed to pay taxes in the recent past, you can now do so
without fear of penalty or interest payments. The “Voluntary Compliance
Encouragement Scheme” announced in the budget allows you to make a payment
since 2007 in one or two instalments at prescribed dates. On another note, if
you run an air conditioned restaurant that could avail of service tax exemption
if you did not serve alcohol, the distinction no longer applies and the tax is
chargeable to you now as well.
Customs
Duties: Even though overall export duties have remained unchanged, sectors
that have been hit on account of the global recession, have been provided a
fillip in the budget. For instance, excise duty on leather goods has been
decreased from 7.5% to 5% and duty on pre-forms of gem stones has been
decreased from 10% to 2%.
Goods and Services tax: While the
budget announcements on GST do not impact immediately, it does prepare ground
for a GST law. In fact, it has also set aside a corpus to compensate states for
loss in tax revenues once a new GST law comes into effect.
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