[pic]

TERM PAPER

OF

MICRO ECONOMICS

ON

BUDGET 2009:AN EVALUTION OF ITS EFFECTS ON AAM AADMI

INTRODUCTION OF BUDGET 2009
The main challenges outlined by the Finance Minister, Mr. Pranab Mukherjee, while presenting his Budget speech for the short term and long term perspective of the Indian economy are: 1. To lead economy to high GDP growth rate of 9% p.a. at the earliest. 2. To deepen and broaden the agenda for inclusive development. 3. To improve delivery mechanisms of the government.
In keeping with tradition, the Budget proposals are a mixed bag of the good and the bad. Some of the biggest disappointments in the Budget proposals are that there are no provisions for any reforms in the FDI policy, the public sector enterprises such as banks and insurance companies are to remain in the public sector and there is a projected fiscal deficit of 6.8%. The major positives are the proposals to abolish Fringe Benefit Tax (FBT), Commodities Transaction Tax (CTT) as well as to phase out surcharge on income tax starting with its elimination in this Budget from personal income tax. Another significant benefit is the clarification on taxation of Limited Liability Partnerships (LLPs).
This synopsis prepared by the tax team of ALMT Legal summarises some of the important direct and indirect tax proposals that were made by the Finance Minister in his Budget speech on 6 July 2009.

BUDGET 2009-10 – SUMMARY OF PROPOSALS
Direct Tax
The Budget focuses on improvement on the efficiency of the tax system by proposing setting up of a Centralized Processing Centre (CPC), introduction of a new direct tax code for