There was some good news for people on the income-tax front. While, the income tax limit has not been changed, the threshold limit has been raised by Rs 10,000 giving every assessee a relief of Rs 1,000.
Tax payers will have some relief: the exemption limit has been increased to Rs 110,000. For women, it has been increased to Rs 145,000. For senior citizens: to Rs 195,000.
Medical insurance will be increased to Rs 15,000. For senior citizens, it has been increased to Rs 20,000.
There will be a service tax on Residents Welfare Associations whose members contribute more than Rs 3,000.
Two lakh people will benefit from the service tax exemption. The Government stands to lose Rs 800 crore.
The Markets are also likely to be impacted by the increase in the dividend distribution tax, from 12.5% to 15%. Also, the cess on education has been raised by
As for indirect taxes, Chidambaram said that the Tax-GDP ratio has gone up from 9.2% in FY04 to 11.4% in FY07. A cut peak rate from 12.5% to 10% and the Government targets FY08 revenue deficit at 1.5% of GDP. Customs duty on polyester fibre and yarns cut from 10% to 7.5% while the customs duty on plastics reduced to 7.5%. All coking coal exempt from customs duties and custom on cut and polished diamonds has been brought down from 5%to 3%. Customs duty on sunflower oil cut by 15 % points and general custom rate on medical equipment cut down by 5%.
There has been no change in service tax rate. Excise duty on biscuits costing less than Rs 50/kg and all ready-made food mixes abolished. As is expected by now, the excise duty on cigarettes has been hiked by 5%. Ad valorem duty on diesel and petrol has been cut to 6%.