Pranab has taken much more than given

By: | Updated: 17 Mar 2012 06:01 AM


Calcutta: Pranab
Mukherjee has taken back much more than what he has given as relief to
taxpayers. The direct tax proposals are expected to cause a net revenue
loss of Rs 4,500 crore. But the increase in indirect taxes because of the
hike in service tax and excise duty is estimated to generate an additional
revenue of Rs 45,940 crore. This means the government will be left with a
net tax revenue collection of Rs 41,440 crore after the giveaways.

In
such a skewed give-and-take, the hardest hit will be the salaried who,
ironically, are among the most diligent taxpayers. The finance minister
has increased the basic exemption limit to Rs 2 lakh. While doing so, he
has done away with the higher exemption limit allowed for women aged below
60.

The reduction in tax liability is somewhat moderate for those
earning Rs 10 lakh or more a year. Tax saving for this income group is Rs
22,660 for men and Rs 21,630 for women per annum, respectively. If you are
male and have an annual income of Rs 10 lakh or less, you stand to save
around Rs 171 a month under the new proposals. But this will be just
enough to meet the impact of inflation (7 per cent) on a monthly grocery
bill of Rs 2,452. If your bill is higher than this amount — in many
houses it will be — your income tax gains from this budget will
evaporate. (For women, the savings will be Rs 85 a month).

The
hike in service tax, widening of taxable services and increase in excise
duty will worsen the situation. Barring services under 17 heads, most
day-to-day activities will attract a 12 per cent tax, up from 10 per cent.
If you are male and earn below Rs 10 lakh a year, your gain from the
income tax relief will be negated the moment your bill for taxable
services crosses Rs 8,583.50.




The finance minister has also increased the standard excise duty to 12 per
cent from 10 per cent and merit excise duty (on select goods) to 6 per
cent from 5 per cent. An increase in excise duty will immediately increase
the prices of most manufactured goods.




The Telegraph, Calcutta




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First Published: 17 Mar 2012 06:01 AM
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