Finance Minister Pranab Mukherjee left the salaried class looking for more.
Both taxpayers and financial planners say the rise in the income-tax exemption limit to Rs 1,80,000 from Rs 1,60,000 is not enough in the face of high inflation that has pushed up their expenses.
The finance minister, however extended the tax deduction under Section 80C on investment in infrastructure bonds of up to Rs 20,000 for one more year.
By raising the tax exemption limit by Rs 20,000, the government has left an additional Rs 2,060 per annum – a humble Rs 171 per month – more in the hands of individuals.
Rohit Agarwal, a resident of Som Vihar in New Delhi, who has witnessed a significant rise in his household expenses over the past several months, said he was disappointed as he was looking for more reliefs.
“It is meaningless and brings no difference to me,” he said.
However Agarwal, who has a family of four and runs a strategic consulting firm called Maverick, said that his father who is now 77 will benefit when he hits 80 and will enter the new “very senior citizen: category and claim exemption on taxable income of up to Rs 5 lakh.
Though the minister extended the infrastructure bond benefit, the fact that the companies that came with their bonds have not been able to get full subscription to their bonds is a matter of concern.
“I think the government should make it more meaningful and attractive by increasing the limit of investment in it,” said an expert who did not wish to be named.
Experts also feel that the government should have done more in terms of offering tax breaks to individuals. “The government should have come out with bold steps as raising the exemption limit from Rs 1,60,000 to Rs 1,80,000 will have no material impact,” said Amar Pandit, a Mumbai-based financial planner.
While there is nothing to cheer about, some experts feel that no hike in the excise tax and service tax is a good news.