r2i forum

Just read this whole thread. Realised whatever I have been reading so far about taxes in India is going to be different! sigh!!
Whats the latest update?
Has the discussion taken place?
can anyone point to a summary that describes the final shape the bill has taken?

thanks.

RAJESH H DHRUVA;264555
2. As such, the Bill will have to be blessed with the consent of both the Houses.

Rajesh, are you sure about this? My understanding is that all financial bills require "Lok Sabha" approval only. SRajya Sabha is called upper house but actually lower is power status :wink.

vij_mahesh;297056Rajesh, are you sure about this? My understanding is that all financial bills require "Lok Sabha" approval only. SRajya Sabha is called upper house but actually lower is power status :wink.

You are right about the power, but both house needs to pass the bill. The general consensus is upper house is merely a rubber stamp in most of the cases. And I believe lower house can overrule the upper house(need more votes than plain majority).

VS007;297065You are right about the power, but both house needs to pass the bill. The general consensus is upper house is merely a rubber stamp in most of the cases. And I believe lower house can overrule the upper house(need more votes than plain majority).

I don't think that money/financial bills need approval from Rajya Sabha. Rajya Sabha's advice is sought though but not binding. It is necessary also as PM needs majority in Lok Sabha. If ruling party does not have majority in Rajya Sabha, I can tell you that country will be in financial mess if Rajya Sabha approval is needed. Here is the link:

http://en.wikipedia.org/wiki/Lok_Sabha

Money bills can only be introduced in the Lok Sabha, and upon being passed, are sent to the Rajya Sabha, where it can be deliberated on for up to 14 days. If not rejected by the Rajya Sabha, or 14 days lapse from the introduction of the bill in the Rajya Sabha without any action by the House, or recommendations made by the Rajya Sabha are not accepted by the Lok Sabha, the bill is considered passed.

vij_mahesh;297056Rajesh, are you sure about this? My understanding is that all financial bills require "Lok Sabha" approval only. SRajya Sabha is called upper house but actually lower is power status :wink.

This is not a financial bill. This is just the act. Budget is a financial bill.
That is why they are taking out the rates and limits from it. Budgets will still be there, describing the income and expenditure.

dbs;297089This is not a financial bill. This is just the act. Budget is a financial bill.
That is why they are taking out the rates and limits from it. Budgets will still be there, describing the income and expenditure.

http://rajyasabha.nic.in/rsnew/practice_procedure/financial_procedure.pdf

This is what official website say:
Page-1, para a): It is a money bill if it deals with regulations, alteration, imposition of any tax.
Last paragraph on page-2 (continuing on page-3) explains that Rajya Sabha's amendments are recommendations only for any money bill.

1) I saw in the news today that the govt. is planning to introduce upto Rs. 3 lakhs exemption on long-term savings. Is this going to be under section 80(C) effectively raising the limit under 80 (C) to Rs. 4 lakhs?

2) Also, the proposal to got to EET on PF, PPF or retirement benefit schemes is going to be withdrawn. They will remain as EEE.

They are rolling back most of the proposals affecting individuals. Its not possible to win elections if they passed the bill in its original form. So now tax slabs are higher and there is the housing exemption

The proposal to tax Marutius based companies will drive FII's out of the market in the near term. Of maybe they have already exited the market.

The most disturbing proposal here is to equate the treatment of short-term and long-term capital gains. (perhaps this my US financial sense that is so horrified at this proposal). Further both will be taxed at the marginal rate (which is proposed to be 20% from 10-25L and 30% for income over 25L).

The impact of this is many fold:
- There is no incentive or encouragement to hold an investment over the long term: Can increase volatility and discourage investment. Can choke vital investment needed for India's growth
- It just beats logic to tax capital gain at the same rate as an income - capital gain results from investment and investment has to be treated differently from earned income. A liberal economic policy encourages investment, which in turn create jobs.
- Will put equity investors at a significant disadvantage and drive many away towards other methods of capital gains
- Possibly there will be a rush of capital from the equity to the real-estate market - another potential bubble
- Will drive more of the transactions (which can come under capital gain purview) underground - we should be doing the opposite of this. Go to a more liberal tax regime (10 or 15%) where the tax is not considered punitive enough to try to evade it.
- Will give another advantage to habitual and systematic tax evaders (self-employed, businessmen etc) - they have many more avenues to claim capital loss.
- The cruelest cut from a "socialist" government: puts domestic and individual investors at a disadvantage vis-a-vis foreign institutional investors.

I may be mistaken here - since the reporting is not uniform - different channels and newspapers are claiming different things. I saw a slightly more optimistic article in DNA: http://www.dnaindia.com/india/report_government-to-go-slow-on-personal-tax-reforms_1396965



They are seeking comment, so please speak up if you can:

"Responses to the Revised Discussion Paper should be sent online through the link provided at these websites or at the following e-mail address: [email][email protected][/email]. Responses are solicited upto 30th June, 2010." Direct tax code comment website: http://finmin.nic.in/dtcode/comments.asp