The government did not disappoint on expectations that it would increase the tax exemption limit for individuals. But it did nothing very dramatic on this front.
The basic exemption limit for individuals was Rs 160,000 earlier, that is people with taxable income up to this amount paid no tax. He has hiked this by Rs 20,000 to Rs 180,000, which will result in a saving of up to Rs 2,060 per annum (@10% plus 3% education cess). So, the budget will give about Rs 170 a month to the average individual, which really does nothing for an average household budget of about Rs 10,000. But he cannot be accused of doing nothing.
What else has the FM done for individuals?
The exemption limit for the senior citizen has risen from Rs 240,000 to Rs 250,000, which is a mere saving of up to Rs 1,030 a year, for those in the 65-79 age bracket.
Senior citizen’s age limits have now been brought down to 60 years, compared to 65 years earlier. This brings the IT department on par with other government departments –the railways for example- on how it defines a senior. People in this age bracket have benefited substantially, since their exemption limit is now Rs 250,000 instead of Rs 160,000 earlier. They get an additional amount of up to Rs 9,270 per year in the pocket.
The best is reserved for senior citizens aged 80 years and above. Their income limit for tax exemption has more than doubled to Rs 500,000. They will save up to Rs 26,780 a year, a substantial sum, as a result of the Budget proposal. Putting more money in the hands of the elders does help them cope with a rising price situation. And, it also earns the FM loads of goodwill in the bargain.
What about the aam aadmi?
There is no direct effort from the government’s side to curb inflation. The tax sops give something to the middle-class for certain, but it does little for the urban poor, who do not fall in the tax bracket and hence, do not benefit from lower taxes. For them, the FM appears to pinning hopes on economic growth driving up wages.