The Finance Minister is going to announce Union Budget 2010-11 on February 26, 2010. People are waiting for various goodies and policies from the government and also predicting that the stimulus package will be taken back. Disinvestment and 3G auction will be the prime concern for the industry, but people are keen to know about the tax rebate and the solutions for the increasing inflation especially food inflation in the country.

Indian Budget for 2010-11 is also keenly awaited for several reasons. To answer the Obamas call on US outsourcing policies, various tax holiday for Software Technology Park and seeking a unified tax rate system for the industry.

IT sectors expectations from the Budget

The IT industry undoubtedly is one of the most significant sectors critical to India's emergence as the next economic superpower. According to various analysts, Indian IT sector is predicting a tax holiday under the Software Technology Park (STP) scheme. They can have tax holiday u/s 10A and 10B in the sunset clause.
Further, IT sector is paying about 20% effective tax rate presently by including minimum alternative tax of 15 -19 %. But, if the STPI scheme is withdrawn, IT has to pay the current 33% corporate tax.

In addition, the STPs and EOUs do not enjoy full tax free status as they are paying Minimum Alternative Tax (MAT) @16.995% on their book profits. To help the IT sector, a rollback of MAT will boost the sectors operations in the present thin margins.

At present, the corporate tax is flat 30%. Various sectors beside IT expected that it should be decreased and come in line with the introduction of Direct Tax Code (DTC) suggesting a 25% rate. Earlier, the individual rate was lowered by 30% previous year also.

Telecom sector seeks few incentives

Besides seeking quick auction for 3G networks, the sector wants some incentives in m-commerce and telecom equipment manufacturing segment. The sector also hopes for a unified tax rate system to save telecom companies from the dual taxation at both Central and State-level.

Further, the sector is expecting cheap credit from the government to boost up the internal production and the scope of exports.

Re-fixing of Tax Slabs:

After the introduction of sixth pay commission, the salaries of government employees had been increased, but as the slab rates for individual taxation remain moreover same, people have to give major chunk of their extra surge in salary as taxes. Therefore, the tax slab for women is expected to be revised to Rs 3.5 lakh and senior citizens to Rs 4 lakh in the current budget. In addition, the tax slab rate for the Rs 3 lakh to 10 lakh to be taxed at 20%. The third slab is likely to be increased from Rs 5 lakh to Rs 25 lakh to be taxed at the rate of 30%.

Self Assessment Slab:

At present, businessmen and professionals can self assessment upto Rs 40 lakh. Now, it is demanded that the slab may be revised to Rs 80 lakh to lower the pressure felt by the business people and professionals.