Budget '05-06: A mixed bag for many

There were many smiles even as some grumbled at the Union Budget 2005-06 presented by Finance Minister P Chidambaram on Monday - a mixed bag for the common man.

Homemakers across the country had reason to feel relieved, as the Budget did not adversely affect the kitchen. Abolishing the surcharge of Re 1 per kg on tea, a duty of Re 1 per kg on refined edible oils and Rs 1.25 per kg on vanaspati (hydrogenated vegetable oils) brought cheers for Chidambaram from homemakers.

And, most importantly, they were happy there would be no customs duty and excise duty on liquefied petroleum gas (LPG, cooking gas) for domestic consumption and subsidised kerosene.

"I don't know much about the Budget. I have heard what I wanted to, that the cooking gas rates have not changed. They are already so high," said Sharada Adiyodi, a South Delhi resident.

A cooking gas cylinder currently costs around Rs 282 in New Delhi.

But many like Piyush Dharohar, an ad professional, were not amused at the minister's proposal to hike prices on several other mass consumption products.

With a view to funding healthcare, Chidambaram proposed to hike the tax on tobacco products like cigarettes by about 10 per cent, while a surcharge of 10 per cent is to be imposed on the duties on other tobacco products, including gutka, snuff and pan masala.

However, bidis, or leaf-rolled cigarettes, have been kept out of the tax net.

"I thrive on cigarettes and gutka, on which I already spend a bomb. I guess I will now have to either shift to cheaper brands or abandon one of these," Piyush said.

The Budget also sought to pinch people withdrawing cash of Rs 10,000 and above in a day by levying a tax of 0.1 per cent on the transaction. The measure, aimed at avoiding tax evasion, will translate to an amount of Rs 10 per withdrawal of Rs 10,000.

Coming to direct taxes, Chidambaram announced a large measure of relief to personal income tax payers by proposing to alter the tax brackets.

"I have been making some meagre savings in the last two years. That would have stopped if the taxes had been raised," said Ajit Tyagi, an accountant with a retail grocer, who was happy with the decision.

"Now, I can continue without any fears till the next Budget," Tyagi said.

Chidambaram has further helped people like Ajit by way of tax relief as an inducement to save. He proposed to encourage savings by allowing every taxpayer a consolidated limit of Rs 1 lakh for savings, which will be deducted from the income before tax.