Budget-2008

Two things stand out prominently in the Finance Minister, Mr P. Chidambaram's 2008-09 Budget - a substantial relief to farmers from indebtedness and a bonanza of sorts for the salaried class. The agriculture loan waiver scheme outlined by him in Parliament on Friday would cost Rs 60,000 crore, but there is no provision in the Budget for this, suggesting that the burden would fall on the banking sector for now. For individual taxpayers the Finance Minister has raised the threshold limit for tax to Rs 1,50,000 a year from the current level of Rs 1,10,000, which translates into a straight gain of Rs 4,000 per annum for all tax-payers. He has gone ahead to alter the slabs as well, with the 10 per cent rate kicking in at the Rs 1,50,000 to Rs 3,00,000 slab, 20 per cent at Rs 3,00,000 to Rs 5,00,000 and a 30 per cent tax on income exceeding Rs 5,00,000 per year. For women taxpayers the threshold limit has been raised to Rs 1,80,000 from Rs 1,45,000 and for senior citizens from Rs 1,95,000 to Rs 2,25,000 per annum. For senior citizens, another relief could be in the form of clarifications on the reverse mortgage scheme intended to benefit them in their old age. The scheme, where one could mortgage the house to the bank in lieu of a steady inflow or lump sum amount, has not taken off in the absence of clarifications on the likely tax implication. Mr Chidambaram made it clear that reverse mortgage would not amount to "transfer" and the stream of revenue received by the senior citizen would not be "income". The corporate sector has not been a direct beneficiary this year - corporation tax rates and the surcharge remain unchanged. But there are indirect benefits, in the form of across-the-board reduction in Cenvat (excise duty) rate from 16 to 14 per cent, which should spur demand and, with more money in the hands of the taxpayer, more sales hopefully. Indian industry would also continue to enjoy the same level of protection against competitive imports with unchanged peak customs duty of 10 per cent. The auto sector has already raised a toast as excise on small cars and twoand three-wheelers and also buses and chassis has been lowered from 16 to 12 per cent and the pharma sector has given its thumbs up to the Budget as excise for all goods manufactured by this sector would see a cut from 16 to 8 per cent. Corporate debt instruments stand exempt from tax deduction at source.