Photographs: Uttam Ghosh/Rediff.com Santosh Tiwari in New Delhi
Tax incentives to software companies under Sections 10A and 10B are set to continue next year, with a change in the basis of benefits from profit-linked to investment-linked.
A senior finance ministry official told Business Standard that the Budget 2011-2012 is likely to make provision for continuing the scheme into the next financial year.
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Budget may hike tax exemption to Rs 1.75 lakh
Photographs: Uttam Ghosh/Rediff.com
Budget may hike tax exemption to Rs 1.75 lakh
Photographs: Uttam Ghosh/Rediff.com
There were indications that Sections 10A and 10B would continue, but there was no clarity on whether it would remain profit-linked in 2011-2012 or would change to being investment-linked.
The official said making the whole scheme investment-linked would ensure continuity once DTC came into force.
. . .
Budget may hike tax exemption to Rs 1.75 lakh
Photographs: Uttam Ghosh/Rediff.com
Budget may hike tax exemption to Rs 1.75 lakh
Budget may hike tax exemption to Rs 1.75 lakh
Photographs: Uttam Ghosh/Rediff.com
He added that currently, the exemption limit is Rs 1.6 lakh (Rs 160,000) and considering the fact that inflation is running at around 10 per cent, an increase of 10 per cent in the exemption limit could be expected in the upcoming Budget.
This would mean that the exemption limit would probably be enhanced by Rs 15,000 to 1.75 lakh (Rs 175,000).
. . .
Budget may hike tax exemption to Rs 1.75 lakh
Photographs: Reuters
This step would result in a revenue loss of around Rs 4,000 crore (Rs 40 billion), said the official, adding that this would mean a Rs 1,500 tax benefit a year to the taxpayer.
He said that the increase in the exemption limit would also be a step towards aligning the tax structure with DTC, as the exemption limit under the proposed regime is Rs 2 lakh (Rs 200,000) a year. DTC is expected to come into effect from 2012-2013.
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