The finance minister has presented the budget and newspapers and TV channels are full of analysis by financial experts. The financial experts have called the budget by various names: election budget, populist budget, anti-reformist, shaped by fiscal fundamentalism and neo-liberal outlook and so on. Let’s cut through this maze of financial jargon and have a look at the impact of the various measures announced in the budget on the life of common man.
- The most important topic of interest for the common man in the budget is the income tax rate. Income tax exemption limit has been raised for men, women & senior citizens from 110,00 to 150,000; 145,00 to 180,000, and 195,001 to 225,000 respectively. The tax slabs have also been changed. In simple terms, the tax benefit for a working male ranges from a minimum of Rs.4,000 to a maximum of Rs.44,000. Thus, you will have more money in your hands for consumption as well as investment.
- For all those who were planning to buy a vehicle there is good news. Excise duty on small cars and two-wheelers has been reduced from 16% to 12%. As a result small cars are expected to be cheaper by Rs.8000 - 16000 and two wheelers by Rs 1500 – 3000. One inadvertent effect of this measure could be more traffic jams and more pollution.
- Mobile phones will become a bit more costly as a result of 1% national calamity contingent duty slapped on all handsets sales.
- Wireless data cards are set to become cheaper as excise duty on them has been waived off. This is expected to shore up broadband usage and penetration nationally.
- Excise and customs duty on modems and set-top boxes has been reduced. This will result in cheaper DTH connections.
- Fast moving consumer goods such as soaps, detergents, toothpastes, break fast cereals etc may become cheaper as result of duty cut.
- Budget for 2008-2009 has axed the cash transaction tax. It included a 0.1% levy on “taxable banking transaction,” which included cash withdrawals of more than Rs 50,000 for individuals and HUFs and Rs 1 lakh for others in a single day from non-savings bank account maintained with any scheduled bank.
- Short term capital gains tax has been raised from 10% to 15%. So, now it makes more in long term investment in equity market.
- The budget has lot of good news for senior citizens. The budget has clarified that earnings received from reverse mortgage would not be treated as income.
- Another good news for senior citizens is in terms of health care insurance. Until, now if an individual bought health cover for his spouse and dependent children, he could avail of a deduction of Rs 15,000 on his taxable income. Now he will get additional deductions if he buys health insurance for his parents. In case, the parents are senior citizens, the person can claim a deduction of Rs 20,000.
- Certain life saving and bulk drugs are set to become cheaper on account of reduction in excise and customs duty.
- Cleaner drinking water will now be available at a cheaper cost as excise duty on water purifiers has been halved.
- There is good news for all the women. Duty on polished cubic zircona and rough coral has been reduced. As a result gem and jewellery is expected to become cheaper.
- All the smokers better quit smoking. The price of filtered cigarettes has been increased by Rs 670.53 per 1000 sticks and non-filtered cigarettes by Rs 800.31.
In a nutshell, the 2008-2009 Indian union budget has more cheers than tears for the common man.