The Hindu : New Delhi News : IT sops bring cheer

Online edition of India's National Newspaper
Tuesday, Mar 01, 2005

New Delhi

New Delhi

IT sops bring cheer

By Our Staff Reporter

NEW DELHI, FEB. 28. The Union Budget presented by the Finance Minister, P Chidambaram, in Parliament today brought cheer to a large number of people here in the Capital thanks mainly to major income tax concessions and for sparing vital commodities, particularly oil and petroleum products, from any price increase. They also expressed happiness over sanctioning of more funds for the health, education, infrastructure and agriculture sectors as it would further fuel economic growth. However, the 0.1 per cent tax on cash withdrawals of Rs.10,000 and above evoked strong all-round criticism. For the salaried class, major restructuring in income tax slabs and increase in basic tax exemption limit came as a pleasant surprise as from the next fiscal they will have to pay less income tax. And if a taxpayer chooses to invest money, the tax liability will be reduced further. Similarly, the Budget also brought good news for senior citizens and women who will get more concessions as far as their tax liabilities are concerned. But employees of large corporations and private companies expressed unhappiness over introduction of the Fringe Benefits Tax at the rate of 30 per cent for taxing perquisites.

"For those earning Rs. 1.50 lakhs per annum, the tax liability will come down to Rs.5,000 as against the prevailing Rs.19,000 and in case of Rs.2.50 lakhs, the income tax will come down to Rs.25,000 from Rs.49,000. The tax liability will be further reduced if a taxpayer invests money in various schemes. This is a substantial gain for middle and upper middle class people who will now have more purchasing power in their hands, which is good news for the economy," said Rajesh Agarwal, an income tax expert.

"I always felt overburdened with my income tax liability and expected the erstwhile National Democratic Alliance Government to announce restructuring in the income tax structure. But now the Congress-led United Progressive Alliance has taken this welcome step that will ensure more money in the hands of salaried class," said Umesh Kumar, an engineer. However, most people found the proposal of levying 0.1 per cent tax on cash withdrawals of Rs.10,000 and above absolutely ridiculous and uncalled for. "The Finance Minister's idea to check the menace of black money by monitoring bank transactions -- that too for as low as Rs.10,000 -- is totally misplaced. It will only create confusion and lead to harassment of people. We require money on everyday basis for emergency medical expenses, weddings in the family, payment of fees and other genuine pressing needs. Taxing people for withdrawing their hard-earned money is a very un-pragmatic step which should be immediately withdrawn," remarked Om Prakash, a Central Government employee.

People also welcomed the hike in prices of cigarettes and tobacco products hoping that this will discourage people from consuming such unhealthy products and the money generated from sale of such products will be spent on augmenting health services and improving medical care. Similarly, concessions to footwear and textile sectors and reduction in prices of tea, refined edible oil, matchbox, tyres and air-conditioners were also appreciated.

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