Prime Minister of India Narendra Modi has encountered the major exam of his reform credentials, when his fresh-faced government presents its first budget.
Modi, 63, with an overwhelming election victory in May and with an assurance to lift growth and create jobs for the 1 million people who enter India's workforce every month. No doubt, Finance Minister Arun Jaitley's maiden budget has lived up to BJP's assurance of leading to Achhe Din (Good Days).
However the Finance Minister attempted to give relief to the individual taxpayers in what his party labelled a ''growth-oriented budget'', he though stopped short of coming up to the concerns regarding other sectors, which were enthusiastically expecting some relief.
"I propose not to make any changes in the tax rate. However, with the view to provide relief to small and marginal and senior citizen, I propose to increase the personal income tax exemption limit by Rs 50,000 from Rs 2 lakh to Rs 2.50 lakh in case of all individual tax payer who are below the age of 60 years," the Finance Minister said while bestowing budget for 2014- 15 in Parliament.
The most imperative declarations made by the Finance Minister are as follows: Salaried Class
Raising Income tax exemption limit: Although the slab of tax free income has not enthused up in line with real inflation, Arun Jaitley's notice on taxation has carried some sort of respite to the individual tax payers as it will upsurge the purchasing power of individuals and arouse demand.
The personal income-tax exemption limit has been raised by Rs 50,000/- that is, from Rs 2 lakh to Rs 2.5 lakh in the case of individual taxpayers, below the age of 60 years.
Exemption limit elevated from Rs 2.5 lakh to Rs 3 lakh in the case of senior citizens. On the other hand there is no change in the rate of surcharge either for the corporates or the individuals, HUFs, firms etc.
Raising tax exemption under 80C: Investment limit under Section 80C of the Income-Tax Act has also been raised from Rs 1 lakh to Rs 1.5 lakh which will embolden savings to some extent.
Public Provident Fund (PPF): In added relief to the depositors, the Finance Minister has raised Public Provident Fund (PPF) deposit limit from Rs 1 lakh to Rs 1.5 lakh per annum.
Hiking the cap on interest on home loan: The realty sector, which has been under compression for quite some time, has now been given a rest by the Finance Minister. To incentivize investments into the sector, the deduction limit on account of interest on loan in respect of self-occupied house property has been elevated from Rs 1.5 lakh to Rs 2 lakh.
To boost small entrepreneurs, an Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs 25 crore in any year in new plant and machinery has been declared. The profit will be accessible for three years i.e. for investments upto 31.03.2017.
Investment allowance to manufacturing company investing more than Rs.100 crore announced last year will continue till 31.03.2015.
Finance Minister's budget announcement had nothing precisely for women. Previously, women earning upto Rs 2 lakhs were exempted from paying tax. There was extensive expectation that the limit would be hiked by a minimum of Rs 50,000 over and above the general category exemption limit.
As of now, senior citizens earning upto Rs 2,50,000 did not come under the tax bracket. Income tax exemption limit for senior citizen has now been raised to Rs. 3 lakh.
For long, housewives have been economizing on their kitchen outlays, owing to excessive prices of needed items, but the NDA government's announcement on packaged/processed food products and edible oil will certainly give some breather to them.
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