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| Budget 2007: Taxpayers disappointed |
| Budget 2007: Taxpayers disappointed
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| INDIA
, 28-February-2007
9:37:13 AM |
| Finance Minister P Chidambaram's Budget for 2007-08 has proposed a marginal increase of Rs 10,000 in threshold tax exemption limit, while foisting an additional one per cent education cess on them.
On the backdrop of rising prices and high inflation, taxpayers were expecting increase in exemption limit by Rs 30,000 to Rs 50,000.
The Budget proposed to increase the income tax exemption limit from Rs 1,00,000 to Rs 1,10,000. For women, the exemption limit has been raised from Rs 1,35,000 to Rs 1,45,000, and for senior citizens from Rs 1,85,000 to Rs 1,95,000.
As a result of these proposals, individual taxpayers will get a relief of Rs 1,000, while senior citizens will benefit by Rs 2,000.
However, this hike in threshold limit would be nullified by increase in education cess from two per cent to three per cent.
Chidambaram also put additional burden on taxpayers investing in stock markets by raising dividend distribution tax from 12.5 per cent to 15 per cent.
"The proposals to bring employee stock options under fringe benefit tax and increase in the dividend distribution tax is regrettable," said N Ramachandran, CFO, iGATE Global Solutions.
Education cess
This education cess - paid not only on income tax but also on all the products and services covered under excise, customs and service tax.
Experts argue that this hike in education cess would be a dampener in government's thrust to tame inflation.
"Education cess and service tax designs of the Budget would have a negative impact on prices" said Madhur Bajaj, President, Society of Indian Automobile Manufacturers.
The Indian car industry has already decided to pass on the burden of additional education cess proposed in the Budget 2007-08 to consumers
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