Finance Minister Jaswant Singh has made a slew of people-friendly announcements in the Budget 2003-04, though he did not tinker with the Income Tax rates for both individuals and corporates.
Against expectations, Singh did not raise the Income Tax exemption limit and retained it at Rs 50,000, though he removed the five per cent surcharge for individual Income Tax payers. He also raised the standard deduction limit and cut the dividend tax in the hands of the investor.
Even long term capital gains tax has been made tax-exempt. A one-page Income Tax return form would be introduced.
Singh said standard deduction for salaried class with an annual income up to Rs 5 lakh will be up to 40 per cent of salary or Rs 30,000, whichever is lower. For those earning above Rs 5 lakh, standard deduction will be Rs 20,000.
Previously, the standard deduction for salary up to Rs 5 lakh was 20 per cent. Above Rs 5 lakh, the standard deduction was nil. From next fiscal, individual tax payers having dividend income will get deduction of Rs 12,000 as against existing from Rs 9,000, the additional Rs 3,000 deduction allowed in case of investment in Government securities (g-secs).
From the next fiscal, education expenses up to Rs 12,000 per two children per family will be entitled to Section 88 benefit under Income Tax Act.
{{/usCountry}}From the next fiscal, education expenses up to Rs 12,000 per two children per family will be entitled to Section 88 benefit under Income Tax Act.
{{/usCountry}}Tax exemption on housing loans upto Rs 1.5 lakhs for self-occupied category will also be retained during fiscal 2003-04.
However, interest rates on small savings schemes and public provident fund (PPF) will be lowered by 1 per cent.