Budget may go by Kelkar on indirect taxes, Rajnath on direct taxes

NEW DELHI: Raising income tax exemption limit to Rs 70,000-80,000 and retaining standard deduction along with tax sops for small savings and housing loans, the Union Budget to be presented on Friday is expected to carry out a "clean up" operation of tax administration besides measures to spur growth.
The maiden Budget to be presented by Finance Minister Jaswant Singh in Parliament is likely to carry out the roadmap laid out by Kelkar on indirect taxes and implement the suggestions of the Rajnath Committee on direct taxes which has dumped some of the proposals made by Kelkar, official sources said.
The Budget, widely expected to carry forward reforms to widen the tax base, is also expected to make an attempt to control expenditure by cutting unmerited subsidies and lowering interest rates on small savings to contain the whopping fiscal deficit that is crowding out investment.
The pre-budget economic survey has given clear signals in this direction by asserting "there is an imperative need to address the three issues of infrastructure, regulatory and tax reforms and fiscal consolidation to establish the foundations of robust 8 per cent growth on a sustained basis."
The sources said though the Finance Minister is likely to indulge in some populism in the face of stiff resistance from the BJP to Kelkar panel recommendations, the Budget may contain measures that would ensure that the revenue loss that may occur was more than made up by widening the service tax base. Service tax collections target be doubled next fiscal from this year''s figure of Rs 6,250 crore.