Archive for Budget 2009

ADVANCE TAX LIMIT HIKED-BUDGET 2009

ADVANCE TAX LIMIT HIKED-BUDGET 2009

This financial year (FY 2009-10)onwards, you won’t have to pay advance tax if your tax liability is less than Rs 10,000 annually. The finance minister has rationalised the advance tax limit in the Union Budget. According to the Budget memorandum, the threshold for this tax has been doubled from Rs 5,000 to Rs 10,000. The limit has been hiked “with a view to providing for inflation adjustment”, says the memorandum. The Rs 5,000 limit has been in existence for the past 13 years. It was fixed in the 1996 Budget.

  • Advance tax applies to individuals whose incomes are not subject to tax deduction at source (TDS).
  • This directly impacts the self-employed in the lower tax slab. This tax is also payable on income on account of interest, tuition fee, rent, trading of securities and consultancy work. 
  • Advance tax is paid every quarter.
  • If not paid on time, it attracts a penalty at an annualised rate of 13 per cent. 

Let’s look at what is the difference the hike, included under the existing provisions of Section 208 the Income-Tax Act, has made to individuals. Considering the earlier exemption of Rs 1.5 lakh and Rs 1 lakh deductions,U/S 80C a person was liable to pay advance tax if he was earning a salary of more than Rs 2.75 lakh. This year onwards, advance tax has to be paid by people earning over Rs 3.10 lakh. The salary level increases as the exemption limit is now Rs 1.6 lakh. “This move impacts individuals in the lower income group. For those in the high income slab, this is immaterial.

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Pay panel award to cost Railways Rs. 13,600 crore

budget 2009                   rail budget 2009

The Sixth Pay Commission award to 14 lakh employees and 11 lakh pensioners will cost the Indian Railways Rs 13,600 crore during 2008-09 and over Rs 14,000 crore in the coming fiscal.

The 2008-09 Rail Budget had originally provided for an ad-hoc allocation of Rs 5,000 crore to meet the incremental commitments arising from the Pay Commission award, including Rs 4,000 crore towards salaries and Rs 1,000 crore on account of pensions.

But, according to the revised estimates presented on Friday, the outgo would be much higher at Rs 13,596 crore – Rs 9,000 crore for salaries and the remaining towards pension.

Worse, for the coming fiscal, the total provision is Rs 14,614 crore (Rs 9,952 crore on salaries and Rs 4,662 crore on pension).

“If there was no Pay Commission award, staff costs would have constituted 44 per cent of our ordinary working expenses. But now, this would go up to 50 per cent this fiscal and a budgeted 52 per cent for 2009-10,” the Financial Commissioner of Indian Railways, Ms Sowmya Raghavan. But huge % is for Officer’s Pay & Pensioners Pension Only!

But, according to her, much of this extra burden is due to arrears that are in the nature of a one-time payment liability.

“The arrears component works out to Rs 15,700 crore (Rs 11,000 crore salaries and Rs 4,700 crore pension) payable over two years. The situation will hopefully revert to normal by 2010-11,” she added.

In his Interim Budget speech, the Railway Minister, Mr Lalu Prasad, sought to underplay the Pay Commission impact, claiming that the organisation will implement its recommendations “with relative ease” because of its “strong financial position”.

Unlike the experience during the Fifth Pay Commission, when the Railways ended up deferring payment of dividend to the tune of Rs 2,800 crore in 2001 and 2002, no default will take place this time, he said.

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