Budget wrap: Govt may raise tax deduction limit on home loan interest

As the finance minister prepares to present the annual budget later this month, Firstpost brings you all the buzz about Budget 2013 that various newspapers reported this morning. Govt may increase tax deduction limit on home loan interest Tax payers have reason to cheer this Budget. A report in the Hindustan Times says the government is likely to increase the tax deduction limit on home loan interest to more than Rs 2 lakh per annum from the current Rs 1.5 lakh. [caption id=“attachment_613136” align=“alignleft” width=“380”] Reuters[/caption] Ministries brace for  24 percent cut in allocation With the government in an expenditure cutting mode, various ministries are bracing for reduction in their annual budgets for the year 2013-14 which could be even up to 24 percent of this fiscal year. According to indications to various ministries, the Finance Ministry would be slashing the annual budget of ministries in view of the poor financial health of the economy. “The Finance Ministry and Planning Commission have said there will be a 24 percent budget cut for all ministries,” a union minister told PTI. When contacted for his comment amid apprehensions of budget cut, Union Rural Development Minister Jairam Ramesh said it is “inevitable” and that his Ministry will have to make do with whatever it gets. “Budget cut is inevitable given the grim fiscal position. We have to make do with what we get,” he said. Women and Child Development Ministry is also bracing for the cut, with a senior official saying the Finance Ministry has already told them to spend only 33 percent of the revised estimate for the last quarter of the current financial year. The Defence Ministry also suffered a cut of Rs 12,000 crore in the revised budget of Rs 1.93 lakh crore in the current fiscal year. Besides, its request for additional Rs 40,000 crore in the current fiscal year was also turned down by the Finance Ministry. Finmin may opt for investment-linked benefits for infra cos this year Infra companies will probably have to bid goodbye to profit-linked benefits post the Budget 2013-2014 as the finance ministry is planning to axe Section 80-IA of the Income Tax Act which provides  tax holiday for 10 years in a row in respect of profits and gains from industrial undertakings or enterprises engaged in development of infrastructure, such as highways, ports, urban facilities, water-treatment plant, natural gas, hospital and hotel, a Business Standard report said today. The ministry, instead is planning to replace the benefits with capital-linked deductions in order to increase revenues for the government and encourage investment. However, considering infra projects require long-term funding, innovative models of funding for infra projects in the upcoming Budget can also fast-track the pace of infra growth in the country. Freebies, subsidies alone won’t help growth: Chidambaram Freebies and subsidies alone would not help in economic development and youth should seek self—employment, Union Finance Minister P Chidambaram said today. “If a country needs to grow, its people stand on their feet and see a strong economic growth, it cannot depend on freebies and subsidies alone. My high command and myself (as Finance Minister) have a clear direction on the progress of the nation,” he said while inaugurating 17 branches of REPCO Bank in Tamil Nadu and Puducherry. Noting that freebies and subsidies can be provided in the beginning, he added, it was the responsibility of the government to create jobs or self—employment for its youth. “The UPA Government has a clear vision of creating jobs for its youth. But there are hurdles. If the branch of a bank is opened, then a question is being raised…,” he said. “A friend of mine commented saying by opening bank branches, people have been made debtors. There is nothing wrong in taking loan for creating business and self— employment. Only taking bribe is wrong and not a loan…,” he said. He said it was “genuine” demand of the people seeking loan for various purposes like education, housing and agricultural activities. The Finance Minister, who extended loan for youths who had started a Self—Help group (SHG), said youths should form more SHGs. The countries where people were self employed had the prospects of being strong country. “I have strong faith in that,” he said. With inputs from PTI