FM puts more money in your pocket

The election budget may not have introduced major changes but much to the relief of the common tax payer, it adhered to this government’s policy of constantly bringing down the tax liability. The basic exemption limit has been further increased from Rs 1.1 lakh to Rs 1.5 lakh, hence till Rs 1.5 lakh there will be no tax liability. For women the limit has increased from Rs 1.45 lakh to Rs 1.8 lakh and for senior citizens it has been raised to Rs 2.25 lakh from Rs 1.95 lakh. In addition to this it also changed the tax slabs thereby reducing the income tax liability by at least Rs 4,000 (See Table: New tax slabs ). “The finance minister has done a good balancing act. Even though there has not been a drastic change but the relief is prominent through alterations in the exemption limit and the tax slabs”, said Amar Pandit, Mumbai-based financial planner.

However, the extra one per cent education cess on account of secondary education levied last year bringing the overall education cess to three per cent still remains. “The surcharge was not touched upon. Surcharge is a temporary feature but there was no mention of doing away with the surcharge”, said Rajesh S Kothari, president, Bombay Chartered Accountants’ Society.

The budget also did not touch upon the most desired reform of giving special tax benefits to long-term savings scheme. “We wanted a separate section to encourage but it did not happen. However, we welcome interest shown in long term savings,” said Shikha Sharma, managing director, ICICI Prudential Life Insurance.