Few sops on tax front
Few sops on tax front
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 ₹ 10,000 giving every assessee a relief of ₹ 1,000.
Tax payers will have some relief: the exemption limit has been increased to ₹ 110,000. For women, it has been increased to ₹ 145,000. For senior citizens: to ₹ 195,000.
Medical insurance will be increased to ₹ 15,000. For senior citizens, it has been increased to ₹ 20,000.
There will be a service tax on Residents Welfare Associations whose members contribute more than ₹ 3,000.
Two lakh people will benefit from the service tax exemption. The Government stands to lose ₹ 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
Indirect Tax
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 ₹ 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%.
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