New Delhi: It was his eight Budget, and one that expected him to choose austerity as the viable option over free-spending populism. Finance Minister P Chidambaram unveiled a bigger-than-expected expenditure layout for the coming fiscal, and asked that the country must make tough spending choices.
Nevertheless, Chidambaram delivered a highly anticipated Budget in the face of a slackening economy encumbered by a lack of confidence, all against a backdrop of lurking election.
But has the Budget brought respite to taxpayers and relief to the common man?
The Finance Minister promised a responsible Budget, backed by the ambition to restore confidence in the country’s finances and managing the economy by reining in spending. But has he delivered?
In the build up to the Budget, Chidambaram had introduced a plethora of reforms — introduced more foreign investment in the country, slashing spending and subsidies.
The finance minister has brought forth Populist schemes, all in the working boundaries of fiscal prudence.
While some schemes will benefit the Aam Aadmi
, others might have to be taken with a bitter pill.
Let’s have a look at what the Budget 2013-14 has in store for the Common Man: Tax Slabs
The FM did not tinker with the Tax Slab in this year’s Budget. However, bad news for the super rich. Chidambaram hiked the surcharge on rich taxpayers by 10 percent with annual income of more than Rs 1 crore.
Assuming an inflation rate of 10 percent and a notional rise in the threshold exemption from Rs 2 lakh to Rs 2.2 lakh, the Finance Minister has proposed to provide a tax credit of Rs 2,000 to every person who has a total income up to Rs 5 lakh.
Around 1.8 crore tax payers are expected to benefit to the value of Rs 3,600 crore.
FM also proposed to increase the surcharge from 5 percent to 10 percent on domestic companies whose taxable income exceeds Rs 10 crore per year.
In the case of foreign companies, who pay the higher rate of corporate tax, the surcharge will increase from 2 percent to 5 percent.
In all other cases, such as dividend distribution tax or tax on distributed income, government has increased the current surcharge of 5 percent to 10 percent.
The additional surcharges will be in force for only one year that is Financial Year 2013-14.
The education cess for all tax payers shall continue at 3 percent.
The tax benefit to the first-home buyer who takes a loan for an amount not exceeding Rs 25 lakh, have been allowed an additional deduction of interest of Rs 1 lakh to be claimed in AY 2014-15.
If the limit is not exhausted, the balance may be claimed in AY 2015-16. This deduction will be over and above the deduction of Rs 1.5 lakh allowed for self-occupied properties under section 24 of the Income-tax Act.
The eligibility conditions of life insurance policies for persons suffering from disability or certain ailments have been also relaxed by increasing the permissible premium rate from 10 percent to 15 percent of the sum assured. This relaxation shall be available in respect of policies issued on or after 1.4.2013.
Benefit over the contributions made to the Central Government Health Scheme, eligible for deduction under section 80D of the Income-tax Act has also been extended for the similar schemes of the Central Government and State Governments.
Donations made to the National Children’s Fund will now be eligible for 100 percent deduction.
First Published: Thursday, February 28, 2013, 14:37