More Money In your Pocket

For most people who depend on a monthly pay cheque for a living, the most significant thing in Budget 2008 is the tax relief announced by finance minister P. Chidambaram. While farmers will cheer the Budget because of the Rs60,000 crore loan waiver it provides them, those drawing salaries will likely be pleased at the prospect of paying less tax than they used to.

Generous grants, compassion, righteous rule and succour to the downtrodden are the hallmarks of good governance, Chidambaram said, quoting poet Tiruvalluvar while explaining the farm loan package.

Chidambarams move to provide some tax relief to individuals is backed by an 8% growth rate in the economy for 12 successive quarters till December, and higher tax collections. A more stringent tax monitoring mechanism and simpler filing policies have increased the number of taxpayers as well as tax receipts.

Tax (or tax relief) isnt the only way the Budget touches the common man. Lowering of excise duties will reduce the prices of several products, including entry-level cars.

An increase in outlay for education and health by 20%, a national programme for the elderly, a national AIDS programme, increased allocation for scheduled castes and scheduled tribes, and programmes for women and children are some of the highlights of Budget 2008. The government has also announced three new social security programmes for the unorganized sector the Aam Aadmi Bima Yojana, Rashtriya Swasthya Bima Yojana and the Indira Gandhi National Old Age Pension Scheme. The subsidy for housing for the poor has also been increased.

However, it is on the tax front that the common man has the most to celebrate. The income-tax exemption limits for individuals have been increased from the current Rs1.1 lakh to Rs1.5 lakh. For women, the basic tax exemption limit has been enhanced from Rs1.45 lakh to Rs1.8 lakh and senior citizens can now avail of the basic exemption limit at Rs2.25lakh instead of the current Rs1.65 lakh. Tax slabs have been increased such that for income up to Rs1.5 lakh, the tax liability will be zero, from Rs3 lakh to Rs5 lakh, the tax rate applicable is 10% and from Rs5 lakh onwards, the applicable tax rate is 30%.