Nagpur: The Budget brings only small joys for common taxpayer, said financial professionals. The move to bring a standard deduction of Rs40,000 in the taxable income was appreciated by the chartered accountants. However, the proposal on introducing long-term capital gains tax on sale of shares left the them disappointed.
The experts also hailed the proposal to calculate capital gains tax on real estate transactions on the basis of actual sale value, if the variation was within 5% of the ready reckoner rates. "The ready reckoner rates are calculated by the state government to assess a market value of a property. Even if the property is sold at a lower price, capital gains are calculated considering the ready reckoner rate only. The budget proposes that now the actual sale price would be taken for calculating capital gains tax liability, if it is less than within 5% of the ready reckoner rate," said Naresh Jakhotia, a chartered accountant.
The move to introduce standard deduction of Rs40,000 is appreciable indeed. However it comes with doing away tax exemption on transport and medical allowances included in the salary. The exemption of Rs34,200 was available on both allowances clubbed, if bills were submitted. Now the exemption has been removed putting in place standard deduction. Considering this, the net benefit due to standard deduction comes to only Rs5800, said Jakhotia.
At Vidarbha Industries Association (VIA) where it is an annual practice to assemble for watching the Budget, the sentiment was upbeat. Those present said not much was expected for the industries but the proposals on farm sector would indeed boost the economy.
Ashok Chandak, a VIA member and also a chartered accountant, said the proposal to cover mutual funds under dividend distribution tax (DDT), will impact returns on investments from these products. With bank interest rates as well as returns on several other assets going down, mutual funds had remained one of the investments offering higher returns.
At VIA, Tejindersingh Rawal appreciated the move against cryptocurrency which includes bitcoin. He said the government has for the first time categorically said it did not recognize any cryptocurrency and will take steps to eliminate its use. This is likely to bring a curb on Bitcoin, a popular cryptocurrency. Such currency does not have any intrinsic value. Cryptocurrency phenomenon has spread even in a city like Nagpur, he said
The proposal on tax exemption for farmer producers companies (FPC) with a turnover up to Rs100 crore was also appreciated.
Sanjay Moriani, a tax lawyer, said there was no major change on the tax front in the Budget. The government should have come up with some relaxation in the penalties extracted on unexplained income found during raids. At present, the rates cross 100%.
(key takeaways)
* Net impact of Rs40,000 standard deduction comes to only Rs5800
* Move on capital gains on real estate deals welcome
* Dividend distribution tax on mutual funds will cut returns
* Government will finally act against Bitcoin
