What is Union Budget
Transcript of What is Union Budget
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 1/12
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 2/12
Planning Commission comes in
The ministries would provide budget estimates for plan expenditure for budget estimates for
the next financial year, only after they have discussed their respective plan schemes with theCentral Planning Commission.
The Planning Commission depends on the finance ministry to first arrive at the size of thegross budgetary support, which would be provided in the budget for the next annual plan ofthe Union government.
In principle, the size of each annual plan should be derived from the approved size of theoverall Five-Year Plan (12th Five-Year Plan, 2012-13 to 2016-17, in the present instance).
However, in practice, the size of the gross budgetary support for an annual plan also dependson the expected availability of funds with the finance ministry for the next financial year.
Reducing deficit, a priority(Please Read the concept of deficit budgeting and related prolems, and FRBMA, have been
asked in pre and mains already, since the new syllabus specifically mentions GovernmentBudgeting these are now hot topics.)
In the past few years, the finance ministry has been vociferously arguing for reduction of
fiscal deficit and revenue deficit of the Union government, citing the targets set by the Fiscal
Responsibility and Budget Management Act and its rules.
Hence, presently, the aspirations of the Planning Commission and Union governmentministries with regard to spending face the legal hurdle of this Act, which has made it
mandatory for the Union government to show the revenue deficit as nil and the fiscal deficit
as less than 3 per cent of GDP.
This means new borrowing of the government in a financial year cannot exceed 3 per cent ofthe country’s GDP for that year.
Final stages of budget preparation During the final stage of budget preparation, the revenue-earning ministries of the Union
government provide the estimates for their revenue receipts in the current fiscal year (revisedestimates) and next fiscal year (budget estimates) to the finance ministry.
Subsequently, usually in the month of January, more attention is paid to finalisation of theestimated receipts.
With an idea about the total requirement of resources to meet expenditures in the next fiscalyear, the finance ministry focuses on the revenue receipts for the next fiscal.
At this stage of budget preparation, the finance minister examines the budget proposals prepared by the ministry and makes changes in them, if required.
The finance minister consults the prime minister, and also briefs the Union Cabinet, about the
budget at this stage. If there is any conflict between any ministry and the finance ministry with regard to the
budget, the matter is supposed to be resolved by the Cabinet.
Consultations with various stakeholders crucial
In the run-up to Union Budget each year, the Finance Minister holds pre-budget consultationswith relevant stakeholders.
The FM also holds consultations with Finance Ministers of States/Union Territories as wellas Trade and Industry representatives.
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 3/12
This has great significance for the process of budget formulation as it helps the FM take
decisions on suitable fiscal policy changes to be announced during the budget.
For this year’s budget, representatives from the agriculture sector, various trade unions,economists, banking and financial institutions and also social sector groups participated in
these consultations in January 2013.
Among others, a delegation of People’s Budget Initiative also met Finance Ministry officialsand shared the People’s Charter of Demands in the month of January 2013. But this year too,like in previous years, the process started late.
Desired changes in expenditure programmes and policies can be influenced only if theconsultations are begun earlier, preferably in October.
Consolidation of budget data
As the last steps, the budget division in the finance ministry consolidates all figures to be presented in the budget and prepares the final budget documents.
The National Informatics Centre (NIC) helps the budget division in the process ofconsolidation of the budget data, which has been fully computerised.
At the end of this process, the finance minister takes the permission of the president of Indiafor presenting the Union budget to Parliament.
It would be useful to point out that while the second and the third stage in the budget cycle ofour country are reasonably transparent, the first stage of actual budget preparation cannot be
said to be open. The process is rather carried out behind closed doors.
BUDGET IN PARLIAMENT With the emergence of Welfare State, Governments have come to look after virtually
everysphere of human life. They have to perform manifold functions from maintaining law and
order, protecting their territories to implementation of plans for economic and social betterment.Besides, they provide a variety of social services like education, health, employment and housing
to the people. Needless to say, Government require adequate resources to discharge these
functions effectively. Where is this money to come from and who is to sanction the funds? The
necessary funds are mobilised from the country’s resources by way of taxes both direct andindirect, loans both long-term and short-term, to meet the Governmental expenditure. In India,
the principal sources of revenue are customs and excise duties and Income-tax on individuals and
companies.
Need for Budget It is not as if the Government can tax, borrow and spend money the way it likes. Since there is a
limit to the resources, the need for proper budgeting arises to allocate scarce resources to various
Governmental activities. Every item of expenditure has to be well thought out and total outlayworked out for a specific period. Prudent spending is essential for the stability of a Government
and proper earnings are a pre-requisite to wise spending. Hence, planned expenditure and
accurate foresight of earnings are sine-qua-non of sound Governmental finance.
Parliamentary Control over Finance
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 4/12
Ours is a Parliamentary system of Government based on Westminster model. The Constitution
has, therefore, vested the power over the purse in the hands of chosen representatives of the
people thus sanctifying the principle ‘no taxation without representation’. Preparation of Budgetfor the approval of the Legislature is a Constitutional obligation of the Government both at the
Centre and the State levels. Legislative prerogative over taxation, legislative control overexpenditure and executive initiative in financial matters are some of the fundamental principles
of the system of Parliamentary financial control.
There are specific provisions in the Constitution of India incorporating these tenets. For example,article 265 provides that ‘no tax shall be levied or collected except by authority of law’; no
expenditure can be incurred except with the authorisation of the Legislature (article 266); and
President shall, in respect of every financial year, cause to be laid before Parliament, Annual
Financial Statement (article 112). These provisions of our Constitution make the Government
accountable to Parliament.
The BudgetThe ‘Annual Financial Statement’, laid before both the Houses of Parliament constitutes the
Budget of the Union Government. This statement takes into account a period of one financialyear. The financial year commences in India on 1st April each year. The statement embodies the
estimated receipts and expenditure of the Government of India for the financial year.
Demands for GrantsThe estimates of expenditure included in the Budget and required to be voted by Lok Sabha are
in the form of Demands for Grants. These Demands are arranged Ministry-wise and a separate
Demand for each of the major services is presented. Each Demand contains first a statement ofthe total grant and then a statement of the detailed estimate divided into items.
Railway BudgetThe Budget of the Indian Railways is presented separately to Parliament and dealt with
separately, although the receipts and expenditure of the Railways form part of the ConsolidatedFund of India and the figures relating to them are included in the ‘Annual Financial Statement’.
Presentation
In India, the Budget is presented to Parliament on such date as is fixed by the President.
The Budget speech of the Finance Minister is usually in two parts.
Part A deals with general economic survey of the country while
Part B relates to taxation proposals.
General Budget was earlier being presented at 5 P.M. on the last working day ofFebruary, but since 1999 the General Budget is being presented at 11 A.M. on the
last working day of February, i.e. about a month before the commencement of theFinancial year except in the year when General Elections to Lok Sabha are held.
In an election year, Budget may be presented twice — first to secure Vote on Account fora few months and later in full.
The General Budget is presented in Lok Sabha by the Minister of Finance. He makes aspeech introducing the Budget and it is only in the concluding part of his speech that the
proposals for fresh taxation or for variations in the existing taxes are disclosed by him.
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 5/12
The ‘Annual Financial Statement’ is laid on the Table of Rajya Sabha at the conclusion
of the speech of the Finance Minister in Lok Sabha.
Budget Documents
Alongwith the ‘Annual Financial Statement’ Government presents the followingdocuments:
an Explanatory Memorandum briefly explaining the nature of receipts and expenditure
during the current year and the next year and the reasons for variations in the estimatesfor the two years,
the Books of Demands showing the provisions Ministry-wise and a separate Demand foreach Department and service of the Ministry.
The Finance Bill which deals with the taxation measures proposed by Government is
introduced immediately after the presentation of Budget. It is accompanied by amemorandum explaining the provisions of the Bill and their effect on the finances of the
country.
Vote on Account
The discussion on the Budget begins a few days after its presentation. In a democraticset-up, Government is anxious to give Parliament full opportunity to discuss the
budgetary provisions and the various proposals for taxation.
Since Parliament is not able to vote the entire budget before the commencement of the
new financial year, the necessity to keep enough finance at the disposal of Government in
order to allow it to run the administration of the country remains. A special provision is, therefore, made for "Vote on Account" by which Government
obtains the Vote of Parliament for a sum sufficient to incur expenditure on various items
for a part of the year.
Normally, the Vote on Account is taken for two months only. But during election year orwhen it is anticipated that the main Demands and Appropriation Bill will take longer time
than two months, the Vote on Account may be for a period exceeding two months.
Discussion
The Budget is discussed in two stages in Lok Sabha. First, there is the General
Discussion on the Budget as a whole. This lasts for about 4 to 5 days. Only the broadoutlines of the Budget and the principles and policies underlying it are discussed at this
stage.
Consideration of the Demands by Standing Committees of Parliament: After the firststage of General Discussion on both Railway as well as General Budget is over, the
House is adjourned for a fixed period.
During this period, the Demands for Grants of various Ministries/Departments including
Railways are considered by concerned Standing Committees (Rule 331G).
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 6/12
These Committees are required to make their reports to the House within specified period
without asking for more time.
The system of consideration of Demands for Grants by the Standing Committees wasintroduced from the Budget for the year 1993-94.
The Standing Committee consists of 45 Members, 30 from Lok Sabha and 15 from RajyaSabha. The reports of the Standing Committees are of persuasive nature (Rule 331N).
The report shall not suggest anything of the nature of cut motions.
After the reports of the Standing Committees are presented to the House, the House proceeds to the discussion and Voting on Demands for Grants, Ministry-wise.
The time for discussion and Voting of Demands for Grants is allocated by the Speaker inconsultation with the Leader of the House. On the last day of the allotted days, the
Speaker puts all the outstanding Demands to the Vote of the House. This device is
popularly known as ‘guillotine’.
Lok Sabha has the power to assent to or refuse to give assent to any Demand or even toreduce the amount of Grant sought by Government.
In Rajya Sabha there is only a General Discussion on the Budget. It does not vote on the
Demands for Grants.
Only so much of the amount is subject to the vote of Lok Sabha as is not a "charged"expenditure on the Consolidated Fund of India.
The "charged" expenditure includes the emoluments of the President and the salaries andallowances of the Chairman and Deputy Chairman of Rajya Sabha and the Speaker and
Deputy Speaker of Lok Sabha, Judges of Supreme Court, Comptroller and AuditorGeneral of India and certain other items specified in the Constitution of India.
Discussion in Lok Sabha on ‘charged’ expenditure is permissible but such expenditure is
not voted by the House. Members have full opportunity to criticise the budgetary provisions during the course of discussion as also to make suggestions for improving thefinancial position of the country.
Cut Motions
Motions for reduction to various Demands for Grants are made in the form of CutMotions seeking to reduce the sums sought by Government on grounds of economy ordifference of opinion on matters of policy or just in order to voice a grievance.
Appropriation Bill
After the General Discussion on the Budget proposals and Voting on Demands for Grantshave been completed, Government introduces the Appropriation Bill. The Appropriation
Bill is intended to give authority to Government to incur expenditure from and out of theConsolidated Fund of India. The procedure for passing this Bill is the same as in the case
of other money Bills.
Finance Bill
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 7/12
The Finance Bill seeking to give effect to the Government’s taxation proposals which is
introduced in Lok Sabha immediately after the presentation of the General Budget, is
taken up for consideration and passing after the Appropriation Bill is passed. However,certain provisions in the Bill relating to levy and collection of fresh duties or variations in
the existing duties come into effect immediately on the expiry of the day on which the
Bill is introduced by virtue of a declaration under the Provisional Collection of TaxesAct.
Parliament has to pass the Finance Bill within 75 days of its introduction.
Supplementary/Excess Grants
No expenditure in excess of the sums authorised by Parliament can be incurred without
the sanction of Parliament. Whenever a need arises to incur extra expenditure, a
Supplementary estimate is laid before Parliament. If any money has been spent on any service during a financial year in excess of the
amounts granted for that service and for that year, the Minister of Finance/ Railways
presents a Demand for Excess Grant. The procedure followed in Parliament in regard toSupplementary/Excess Grants is more or less the same as is adopted in the case of
estimates included in the General Budget.
Budget of a State/Union Territory under President’s Rule
Budget of a State under President’s rule is presented to Lok Sabha. The procedurefollowed in regard to the Budget of the Union Government is followed in the case of
State Budget also with such variations or modifications, as the Speaker may make.
Budget : Concepts and Terminologies
Budget of a government is a comprehensive statement of government finances relating to a
particular year. Every Budget broadly consists of two parts-
1. Expenditure Budget
The amounts of intended expenditure by the Government in the next financial year are
expressed in the Expenditure Budget. The entire Expenditure Budget can be divided into twodistinctcategories, viz.
i) Capital Expenditure - those expenditures by the government that lead to an increase in the
assets or a reduction in the liabilities of the government. It is however not necessary that the
assets created should be productive or they should even be revenue generating. Only the
charges towards the construction of the asset are counted as Capital expenditure, while thesubsequent charges for its maintenance are considered as Revenue expenditure. Most capital
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 8/12
expenditure is nonrecurring.- Examples of Capital Expenditure causing ‘increase in assets’:
construction of a new Flyover, Union Govt. giving a Loan to a State Govt. - Examples o f Ca
pital Expenditure causing ‘reduction of a liability’: Union Govt. repays the principalamountof a loan it had taken in the past
.ii) Revenue Expenditure those expenditures by the government that do not affect its asset-liability position. Most kinds of revenue expenditures are seen as recurring expenditures. The
entire amount of Grants given by the Union Government to States is reported in the Union
Budget as Revenue Expenditure, even though a part of those Grants get utilized by States for building Schools, Hospitals etc. This is so because the ownership of the schools or hospitals
built from the Central grants would not be with the Union Government.- Examples of
Revenue Expenditure are: expenditure on Food Subsidy, Salary of staff, procurement of
medicines, procurement of text books, payment of interest, etc
Total government expenditure can also be divided into another set of categories, viz
1. Plan Expenditure Plan expenditure refers to government expenditure, which is meant forfinancing the programmes/schemes formulated under the ongoing/previous five year Plan
2. Non-Plan Expenditure Expenditures of the government, which are not included under the
Plan Expenditure are called Non Plan Expenditure. It includes some of the important types ofgovernment expenditure, eg:interest payments, pension, defence expenditure, spending on
law and order, spending on legislature, subsidies, and salary of regular cadre teachers,
doctors and other government officials.
2. Receipts Budget.
The Receipts Budget presents the information on how much the Government intends to collect as
its financial resources for meeting its expenditure requirements and from which sources, in the
next fiscal year. This can also be divided into two categories
:i) Capital Receipts- those receipts that lead to a reduction in the assets or an increase in theliabilities of the government.- Capital Receipts that lead to a ‘reduction in assets’: Recoveries
of Loans given by the government and Earnings from Disinvestment;- Capital Receipts that
lead toan ‘increase in liabilities ’:Debt .ii) Revenue Receipts- those receipts that don’t affect the asset-liability position of the
government. Revenue Receipts comprise proceeds of Taxes (like, Income Tax, Corporation
Tax, Customs, Excise, Service Tax, etc.)and Non-tax revenue of the government (like,Interest receipts, Fees/ User Charges, and Dividend & Profits from PSUs).
Government revenue through taxation can be divided into Direct Taxes and Indirect Taxes.
Direct Taxes: Those taxes for which the tax-burden cannot be shifted are called Direct Taxes.
Examples of Direct Taxes are:
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 9/12
i) Corporation Tax This is a tax levied on the income of registered companies in the country,
whether national or foreign, under the Income TaxAct, 1961.
ii) Personal Income tax- This is a tax on the income ofindividuals, firms etc. other thanCompanies, under the Income Tax Act, 1961. This head also includes other Taxes, mainly
the ‘Securities Transaction Tax’, which is levied on transaction in list securities undertakenon stock exchanges and in units of mutual funds
iii) Wealth Tax- This is a tax levied on the benefits derived from the ownership of property,
under the Wealth Tax Act,1957. Wealth tax has virtually been abolished in India.
Indirect Taxes: Those taxes for which the tax-burden can be shifted are called Indirect Taxes.
Any person, who directly pays this kind of a tax to the Government, need not bear the burden of
that particular tax; he/she can ultimately shift the tax burden to other persons later through business transactions of goods/ services. Indirect tax on any good or service affects the rich and
the poor alike!
Unlike indirect taxes, direct taxes are linked to the tax- payee’s ability to pay and hence are
considered to be progressive. Examples of Indirect Taxes are:
i) Customs Duties-In this,the taxable component is import into or export from the country.
ii) Excise Duties: It is a typeof tax levied on those goods,which are manufactured inthe countryand are meant fordomestic consumption. It is atax on manufacturing, whichis paid by the
manufacturer,but he passes this burden onto the consumers.
iii) Sales Tax: It is levied onthe sale of a commodity,which is produced/importedand being sold
for the firsttime. If the product is soldsubsequently without beingprocessed further, it is
exemptfrom sales tax. Before theintroduction of VAT, salestax used to be levied undertheauthority of both CentralLegislation (Central SalesTax) and State Government’sLegislation
(Sales Tax)
iv) Service Tax: It is a tax leviedon services provided by aperson and the responsibilityof
payment of the tax iscast on the service provider.However this tax can berecovered by the
serviceprovider from the servicereceiver in course of his/herbusiness transactions
.v) Value Added Tax (VAT): VAT is a multi-stage tax, intended to tax every stage of sale of agood where some value has been added to the raw materials; but taxpayers do receive credit for
tax already paid on the raw materials in earlier stages.
Debt and Deficit A Debt is a kind of receipt that necessarily leads to an increase of thegovernment’s liabilities. The government incurs a Debt only for meeting the gap created by
excess of its expenditure over its receipts for that year, which is called Deficit.
Fiscal Deficit It is the gap between the government’s total Expenditure (including loans net ofrepayments) and its Total Receipts (excluding new debt to be taken). Thus Fiscal Deficit for a
year indicates the borrowing to be made by the government that year.
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 10/12
Revenue Deficit The gap between Total RevenueExpenditure of the Governmentand its Total
Revenue Receipts iscalled the Revenue Deficit
Distriution of financial resources between the Centre and the States A Finance Commissionis setup every five years to recommend measures for sharing o resources between the Centre and
the States, mainly pertaining to the Tax Revenue collected by the Central Government. Presently
the recommendations made by the 13th Finance Commission are in effect (from 2010-11 to
2014-15), whereby 32 percent of the shareable /divisible pool of Central tax revenue istransferred to States every year and the Centre retains the remaining amount for the Union
Budget.
Tax-GDP Ratio Gross Domestic Product (GDP) is an indicator of the size of a country’s
economy. In order to assess the extent of government’s policy interventions in the economy,
some of the important fiscal parameters, like, total expenditure by the government, tax revenue,
deficit etc. are expressed as a proportion of the GDP. Accordingly, a country’s tax-GDP ratiohelps us understand how much tax revenue is being collected by the government as compared to
the overall size of the economy. A higher tax to GDP ratio in a country is a positive signmeaning that the government is collecting a decent amount of tax revenue as compared to the
size of its economy.
What is Fiscal Responsibility and Budget Management Act ?
The Fiscal Responsibility and Budget Management (FRBM) Act was enacted by theParliament in 2003.
Its objective is to institutionalize fiscal discipline, reduce fiscal deficit and improvemacro economic management.
This law aims at promoting fiscal stability for the country on a long-term basis. It emphasizes a transparent fiscal management system and a more equitable distribution
of debts over the years.
This law also gives flexibility to the Reserve Bank of India to undertake monetary policyto control inflation.
Government needs resources for funding various kinds of developmental schemes and
routine expenditures.
Resources are raised through taxes and borrowing.
The government can raise funds by borrowing from the Reserve Bank of India, financialinstitutions or from the public by floating bonds.
Fiscal deficit is the total expenditure minus the revenue receipt, loan recoveries and
receipts from disinvestment etc. It is a measure of the government borrowing in a year.
However, uncontrolled fiscal deficit is considered harmful for the health of economy.
FRBM Act was notified in 2004 in response to the need felt to curb large fiscal deficit.
The FRBM rules specify annual reduction targets for fiscal indicators.
Originally, the act envisaged revenue deficit to be reduced to nil in five years beginning2004-05.
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 11/12
Fiscal deficit was required to be reduced to3 percent of GDP by 2008-09.
The Act also provides exception to the government in case of natural calamity and for
national security. The implantation of the act was put on hold in 2007-08 due to global financial crisis and
the need for fiscal stimulus.
There was a need for increased government expenditure to create demand to fight off thefinancial downturn and hence the government moved away from the path of fiscal
consolidation for this period.
This law also prohibits borrowing by government from the Reserve Bank of India and
purchase of primary issues of central government securities after 2006.
The act asked the Central government to lay in Parliament three statements in onefinancial year about the fiscal policy.
To enforce fiscal discipline at the state level, the Twelfth finance commission provided
for incentives to states through conditional debt restructuring and interest rate relief. In 2012, the FRBM was amended and it was decided that the FRBM would target
effective revenue deficit in place of revenue deficit. Effective revenue deficit excludes
capital expenditure from revenue deficit and thus gives space to the government to spendon creation of capital assets. The critics of this law feel, it would curb the government’s
social sector spending but there is no denying the fact that the need for fiscal
sustainability cannot be ignored.
The original document of FRBM Act can be seen on:http://finmin.nic.in/law/frbmact2003.pdf.
What is GST?
The Goods & Services Tax (GST) is an indirect tax reform measure which will replaceall of the indirect taxes such as Central Sales Tax, Octroi, excise duty, Service Tax and
Value Added Tax (VAT) at the central and state levels.
India will have a 'dual GST' system where states and the centre both would have power to
levy taxes on goods and services.
Exports would be an exception and GST will not be imposed on them.
Under the GST, no distinction is made between goods and services for purpose of levyingtax.
GST is a value added tax where the person paying tax on his output is also entitled to getinput tax credit on the tax paid on its inputs.
The idea of GST was first proposed in the budget speech of 2006-07 which had set outthe deadline of 2010 for its introduction in the country.
To implement such a tax regime a constitutional amendment would be needed as theCentre as well the States are involved in this issue.
The government expects that the legislative process for the enactment of the GST would be started in the next few months.
The Finance Minister has expressed the hope that the two tax reforms – the GST and
Direct Tax Code (DTC) will be implemented soon.
8/13/2019 What is Union Budget
http://slidepdf.com/reader/full/what-is-union-budget 12/12
The objective of GST is to make the taxation simple and to broaden the tax base.
It will also help create a common market throughout the length and breadth of the
country. The GST has the advantage of redistributing the burden of taxation equitably between
manufacturing and services.
The rate of taxation is also likely to come down with the introduction of GST.
Goods of basic importance will have lower tax rates.
Better compliance and increased tax collection will boost the tax to GDP ratio.
Economic growth is also likely to get an impetus through GST.
A report of National Council of Applied Economic Research has estimated an increase of
0.9 percent to 1.7 percent in the economic growth with the implementation of GST.
Exports will also increase according to this study.
The Direct Taxes Code (DTC)
The Direct Taxes Code (DTC) is said to replace the existing Indian Income Tax Act,
1961. However this bill has never been considered.
Highlights of the Direct Taxes Code bill
Common threshold Income Tax limits and women proposed at 200,000 Rupees per
annum (proposed), up from 180,000
10 per cent tax on annual income between 200,000-500,000; 20 per cent up to 1 million,
30 per cent above 1 million rupees
Tax burden at highest level will come down by Rs. 41,040 annually
Proposal to raise tax exemption for senior citizens to Rs. 250,000 from 240,000 lakh
currently.(NOTE:- Union budget 2011-12 already has proposed it.)
Corporate Tax to remain at 30 per cent but without surcharge and cess.
MAT to be 20 per cent of book profit, up from 18.5 per cent.
Proposal to levy dividend distribution tax at 15 per cent.
Exemption for investment in approved funds and insurance schemes proposed at Rs.
150,000 annually, against 120,000 currently
Proposed bill has 319 sections and 22 schedules against 298 sections and 14 schedules in
existing IT Act.
Once enacted, DTC will replace archaic Income Tax Act. However, many provisions in Income Tax Act will be a part of DTC as well.
Mutual Funds/ULIP dropped from 80C deductions : Income from equity-oriented mutual
funds or ULIP shall be subject to tax @ 5%
Fringe benefits tax will be charged to the employee rather than the employer.