Budget 2009 – The common man's report card

(Divya Baweja is a partner in BMR Advisors. The views expressed in this column are his own)

By Divya Baweja

The Honorable Finance Minister (FM) emphasized on the Aam Aadmi being the focal point for major programs and schemes, while announcing the Union Budget 2009.

Keeping the interest of Aam Aadmi in mind, the FM has widened the income slabs, though marginally.

The basic exemption limit now stands increased to INR 160,000 from INR 150,000 for all taxpayers (other than women below the age of sixty-five, in which case, the basic exemption limit stands increased at INR 190,000).

Similarly, relief has been granted to senior citizens (age of sixty-five or more) by increasing their basic threshold limit to INR 240,000.

Substantial relief has been granted to individual tax payers by deleting surcharge of 10%, which was applicable on individuals having taxable income over INR 1 million. This would result in significant savings to individuals falling in the higher income brackets over INR 1 million. For instance, an individual having a taxable income of INR 3 million would now save about INR 84,000 approximately.

Much to the dismay of the taxpayers, there has been no increase in the amount of permissible deduction under Section 80C of the Income tax Act, which remains pegged at INR 100,000. Also, for people earning income other than salary, the requirement to pay advance tax now arises at INR 10,000 instead of the earlier limit of INR 5,000.