Token income-tax reliefs, middle class disappointed
The middle income groups have been left wanting for more as Pranab Mukherjee did not come up to their expectations – handing out just a small teaser of a concession that hardly helped.business Updated: Jul 07, 2009 00:12 IST
The middle income groups have been left wanting for more as Pranab Mukherjee did not come up to their expectations – handing out just a small teaser of a concession that hardly helped.
While the removal of an income tax surcharge benefits higher income individuals with an annual income of more than Rs. 10 lakh, the hike in the exemption limit of Rs 10,000 for individuals in general and Rs 15,000 for senior citizens left many of them disappointed. Some whined that only the rich got higher relief.
A rise in the tax exemption limit of Rs 10,000 provides a benefit of Rs 1,030 per annum – and that’s just Rs 86 per month. “This 10,000 (exemption) is to buy onion, potatoes and tomatoes,” said Jaideep, an individual who participated in a post-budget chat on hindustantimes.com.
Experts feel that this is not sufficient.
“The exemption is paltry and it won’t matter much,” said Amar Pandit, a Mumbai-based financial planner.
“The government has offered relaxation to higher income earners and left middle and lower incomes in misery. The need was to reduce it for lower incomes,” said another financial planner on condition of anonymity.
“The rise in exemption limit of Rs 15,000 does not make a difference at all,” said retired Lt Gen Rajendra Pal Agarwal, who lives off his army pension.
The skewness of the benefit transfer because of the abolition of the income-tax surcharge is quite visible. An individual earning less than Rs 10 lakh pockets only Rs 1,030 through the rise in exemption limit, but a person whose net income is Rs 10 lakh gets a net saving of Rs 21,530 through the removal of the 10 per cent surcharge.
The higher the income category, the higher is the benefit. A person earning Rs 10 lakh would save 2.2 per cent on account of lesser tax while a person with a net income of Rs 50 lakh would have a saving of 4.7 per cent by paying less as tax.