Date:01/03/2008 URL: http://www.thehindubusinessline.com/2008/03/01/stories/2008030152791900.htm

Back Relief for all taxpayers

V. K. Subramani

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In Budget 2008, the Finance Minister has increased the basic taxable limit for all individual assessees.

This results in a tax relief of around Rs 4,120 (including cess) for the personal taxpayer. The accompanying table shows the tax liability for general taxpayers, women assessees and senior citizens.

From the table it can be seen that in the case of taxpayers having income above Rs 5 lakh but below Rs 10 lakh, the increase in basic limit with change in tax slabs will yield a benefit of Rs 45,320. In the case of women taxpayers, the tax benefit is Rs 44,805 and for senior citizens, Rs 39,655.

In the case of taxpayers having income above Rs 10 lakh, the reduction in tax liability would go to reduce the surcharge burden as well and, thereby, increase the tax savings.

The Finance Minister has indicated that the changes in income-tax rates would be revenue neutral.

A minimum benefit of Rs 4,120 (including cess) given to each taxpayer would entail a revenue loss of around Rs 10,000 crore if the personal taxpayers in our country are taken at around 20 million.

This revenue loss is equivalent to the amount garnered through the VDIS (Voluntary Disclosure of Income Scheme) of 1997.

This relief, though welcome for the individual taxpayer, seems to be a populist measure, keeping an eye on the forthcoming Parliamentary election.

(The author is an Erode-based chartered accountant)