MUMBAI: Contrary to expectations of a populist Budget by a poll-bound government, India’s finance minister in his last full Budget failed to provide any major tax benefits to salaried people, say experts.
Finance minister Arun Jaitley left personal income tax levels untouched saying in the past three years, government of India has made many positive changes in the personal income-tax rate applicable to individuals.
“I do not propose to make any further change in the structure of the income tax rates for individuals,” he said.
However, to provide some relief to salaried taxpayers, Jaitley proposed a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses.
“In contrast to the expectations, nothing much has been proposed in personal taxation. There is no change in the rate of tax for all individuals,” Taxmann director Rakesh Bhargava, said in a statement.
Law firm Shardul Amarchand Mangaldas’ Amit Singhania said, “the amount of Rs 40,000 as standard deduction may not be too significant but definitely will give reprieve to the middle class.”
The Budget also proposed to increase exemption of interest income on deposits with banks and post offices from Rs 10,000 to Rs 50,000 for senior citizens.
It also raised the limit of deduction for health insurance premium and medical expenditure from Rs 30,000 to Rs 50,000, under section 80D for senior citizen.
“The minister has been benevolent to senior citizens and has provided much needed increase in limits for medical expenditure. In addition to this, the limit for tax deduction on interest income has also been proposed. This will give significant relief for senior citizens as they will more disposable cash to expend,” Singhania said.
Last Budget had announced the reduction of corporate tax rate to 25 per cent for companies whose turnover was less than Rs 50 crore in 2015-16, which benefited 96 per cent of the total companies filing tax returns.
Thursday’s Budget proposed to extend the benefit of 25 per cent tax rates to companies with turnover up to Rs 250 crore in FY17.
“Reduction for smaller companies is welcome as it leaves more money in their hands. The rate reduction should apply to all corporate and non corporate businesses,” PwC India’s Rahul Garg said.
On the indirect taxes side, this is the first budget after the roll out of the goods and service tax.
“In the first budget after introduction of GST, the changes on the indirect tax side are limited to customs laws and tariff. The customs duty on various finished goods such as mobile phone, parts of television have been increased with a view to promote domestic production which is in line with local manufacturing push,” Shardul Amarchand Mangaldas’ Sandeep Chilana, said.
Khaitan & Co’s Nihal Kothari said, “Overall government is now concentrating on stabilisation of GST and resorting to increased customs duty rates to promote local manufacturing to create more jobs.”