Mukherjee to present Budget 2011 with focus on infrastructure, tax liability

NEW DELHI - Finance Minister Pranab Mukherjee will present the Union Budget 2011-12 proposals in Parliament on Monday, and it is anticipated that its focus will be on infrastructure and tax liability.

According to informed sources, Mukherjee is expected to lighten the tax burden due to the increase in cost of living in the last few months.

He is also likely to announce steps to boost the infrastructure sector with a view to sustaining the over nine per cent growth in the coming years.

According to an Economic Times report, initiatives could include raising the limit for investment in tax saving infrastructure bonds and providing special thrust to plan expenditure for sectors like road, energy, ports, airports etc.

Currently, investments up to Rs.20, 000 per annum in infrastructure bonds enjoy tax exemption.

Mukherjee may also announce setting up an Infra Debt Fund (IDF), as was suggested by an expert panel headed by HDFC chief Deepak Parekh in June, 2010 to resolve financing issues of the sector.

The Parekh Committee had recommended setting up IDF with an initial corpus of Rs.50, 000 crore for financing projects in this crucial sector and was to be managed and regulated by market regulator SEBI.

The fund, aimed at providing longer-term capital to infrastructure, could provide a boost to the public-private partnership (PPP) projects, thereby pushing investments in key areas like roads, ports and power, among others.

According to the Economic Survey for 2010-11, 293 projects or over 52 per cent of the ongoing 559 infrastructure projects are running behind schedule as on October, 2010 and steps are required to accelerate the pace of infrastructure development further.

Simultaneously, the Survey also said that investment in the key infrastructure sectors like power, roads, ports, airports among others, is expected to increase to 8.37 per cent of the GDP or over Rs.4 lakh crore in 2011-12.

Moreover, the government proposes to raise investment in infrastructure sector to USD one trillion in the Twelfth Five Year Plan (2012-17) from USD 500 billion in the current plan.

A bigger budgetary support is likely to be provided to implement Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) and Re-structured Accelerated Power Development Reforms Programme (R-APDRP), which is meant for reducing transmission and distribution losses in the power sector.

Millions of income tax payers expecting finance minister Pranab Mukherjee to raise the tax exemption limit on Monday.

” He (the Finance Minister) should introduce some of the provisions, which are part of the DTC, like raising exemption limit on income tax,” former finance minister Yashwant Sinha said.

There are about 40 million income tax payers in the country.

The annual exemption limit for income tax at present is Rs.1.6 lakh per annum for men and Rs.1.9 lakh for women. The threshold for senior citizens is Rs.2.4 lakh.

Sinha said the minimum exemption limit should be raised to Rs.2 lakh in line with the proposed Direct Taxes Code, which is under examination of Standing Committee of Parliament on Finance, headed by Sinha.

He also pitched for reintroduction of standard deduction, which was stopped in 2006. A fixed amount is deducted from the earnings of salaried employees over and above the tax exemption threshold, for arriving their taxable income.

Sinha said the provision of standard deduction should be brought back to help the middle class people, who have been impacted by high inflation hovering around eight percent.

He also said that tax incentives on savings should be enhanced. At present, savings up to Rs.1 lakh is deducted from the taxable income. Extra deduction of Rs.20,000 is allowed for investment in infrastructure bonds. (ANI)