Aam aadmi had widespread expectations from finance minister P Chidambaram, hoping that this year's budget would provide relief in terms of reduction in tax rates and encourage household savings through additional deductions to the salaried class.
These expectations have clearly not been met since the finance minister has broadly maintained the status quo regarding personal tax rates and reliefs.
In the budget, there has been no change in existing tax rates of individuals nor has there been any change in the tax slabs. However, as a marginal relief, the finance minister has proposed to provide a tax credit up to Rs. 2,000 to individual taxpayers having incomes not more than Rs. 5 lakhs.
To mobilise additional revenue, the finance minister has proposed to levy a surcharge of 10% on individuals with income of Rs. 1 crore and more. According to the finance minister, this levy is likely to impact only 42,800 taxpayers and that too for one year.
There is disappointment for the salaried class since the much-awaited relief by way of enhanced exemption limit for allowances such as conveyance, medical reimbursement, childrens education allowance etc has not been provided.
Certain reliefs, which have been provided are in the form of rise in eligible limit for deduction in respect of life insurance premia from 10% to 15%. However the cap of Rs. 1 lakh under section 80C has remained unchanged. This measure has not provided any extra saving incentive to individuals in real terms.
To curb the practice of undervaluation in property transactions, the finance minister has sought to impose a tax on the differential value of property for stamp duty purposes and sale consideration if the sale consideration is less than the value defined for stamp duty purpose.
In a nutshell, the budget has not bought much excitement and cheer to the common man who was expecting much more from the finance minister.