Budget 2008-09: Chidambaram at his benevolent best

Mar 01, 2008 Personal Finance

The Budget speech delivered by FM P. Chidambaram is probably the most populist ever, and clearly designed keeping the elections in mind.

The biggest goodie of course was the Rs.60,000 crore waiver to farmers, with the Govt. saying it would compensate banks. Chidambaram said it was time for people to stand up and be counted, and that they could either be for the farmer, or against. Looks like he’s already getting ready with his electoral rhetoric !! The opposition of course was in uproar over this proposal.

He also reduced excise duty on small cars from 16% to 12% and on hybrid cars from 24% to the 14%. This was nice to hear, and maybe I can now seriously consider buying the Hyundai i10 !

For individual tax-payers though, it was smiles all the way as he raised the IT slab rates much higher than anyone would have expected. The revised slabs and tax rates will now be:

Up to Rs.1,50,000 – Nil

Rs.1,50,001 to Rs.3,00,000 – 10%

Rs.3,00,001 to Rs.5,00,000 – 20%

Rs.5,00,001 and above – 30%

For women, the threshold limit has been increased from Rs.1,45,000 to Rs 180,000 and for senior citizens, from Rs.1,95,000 to Rs.2,25,000.

There are no changes in the corporate tax rates.

The Senior Citizen Saving Scheme 2004 and the Post Office Time Deposit Account have been added to the list of instruments under Section 80C of the IT Act. An additional deduction of Rs.15,000 has been allowed under Section 80D to an individual paying medical insurance premium for his/her parents. This would be in addition to the Rs.1 lakh limit for savings under Section 80C of the Income Tax Act, and over & above the Rs.15,000 deduction being currently allowed on premium towards medical insurance for self.

Stock market traders would be unhappy with the increase in short-term capital gains tax from 10% to 15%.

STT (securities transaction tax) paid to be treated like any other deductible expenditure against business income.

The stupid Banking Cash Transaction Tax (BCTT) will be withdrawn from April 1, 2009, and I fail to understand why the Finance Ministry needs a year more to abolish this tax.

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Krishna Dey

declaring all this is fine, but from where chidambaram plans to compensate this Rs.60000 crores ? very stupid budget fm economic point of view ! these people will take the country down the drain just to win the next elections.
Krishna Dey

declaring all this is fine, but from where chidambaram plans to compensate this Rs.60000 crores ? very stupid budget fm economic point of view ! these people will take the country down the drain just to win the next elections.