With the country at the brink of an economic meltdown, the Union Budget 212 was an important one, with the Finance Minister’s main goal being closing the widening fiscal deficit gap. This budget would also be Pranab Mukherjee’s last budget before he retired office to become India’s 13th President.I must be cruel to be kind, said Pranab Mukherjee, when he introduced the Direct Taxes part of the Union Budget. The standard rate of excise duty from 10 per cent to 12 per cent and hiking service tax rates from 10 per cent to 12 per cent much to the chagrin of the common man.
But he offered some respite to the common man. Individual income up to Rs 2 lakh would be free from income tax; income up to Rs 1.8 lakh was exempt in 2011-12. Income above Rs 5 lakh and up to Rs 10 lakh now carries tax at the rate of 20 per cent; the 20% tax slab was from Rs 5 lakh to Rs 8 lakh in 2011-12.
Many expected the Finance Minister to introduce the Direct Taxes Code (DTC).Much to the nation’s disappointment the FM said the bill would be enacted at the “earliest”. He added that the GST network will be set up as a National Information Utility and will become operational by August 2012. Also, a General Anti-Avoidance Rule (GAAR) was to be introduced in order to counter aggressive tax avoidance. This, too unfortunately has been postponed.