What has the common man gained from the recent budget? The common man is often loosely identified with middle-class, a section of society which in all countries is presumed to have the maximum clout with the government. This is particularly true of democracies. In India, for instance, it is presumed that the middle-class’s support for the BJP made all the difference.
A further division of the middle-class into the salaried class, wage earners and so on can also be made. But the most important segment of the middle-class which deserves far greater attention than what it gets now is the category of senior citizens.
The title is generally given to those above 60 years of age, retired from whatever gainful occupation they have had and in the current middle-class setting have children who have settled abroad.With vastly diminished disposable income post-retirement — and often too proud to accept monetary support from their children — even if offered, they will have to save every rupee to meet any crisis, the most important of which are medical emergencies.
Another category that considered to be part of common man or middle-class is the pensioners.
Pensioners better placed
They are slightly better placed than the senior citizens because they get pensions which, however, inadequate is a retirement benefit well earned.
Quibbling over different nomenclatures is meaningful if only one understands some very similar problems. Can policy have a one-size fit-all approach to the middle-class?
Let’s look at the latest budget that had created so much expectation that no amount of concessions or reliefs will satisfy.
The tax sops for individuals are the most significant measure (a) increase in the threshold limit from Rs.2.5 lakh to Rs.3 lakh for senior citizens and from Rs.2 lakh to Rs.2.50 lakh for those below 60. There were expectations that the budget will raise the limit to Rs.3 lakh with a corresponding increase for those above 60. But the increase of Rs.50,000 is still welcome as it will yield a tax saving.
The minimum tax slab for senior citizens now stands at Rs.3 lakh and it is expected that many of them who depend on pensions, interest on bank deposits and so on will benefit.
For very senior citizens the threshold for tax remains at Rs.5 lakh.
(b) For incentivising tax-saving instruments and contributions, the budget has hiked the limit towards deduction under Section 80C from Rs.1 lakh to Rs.1.5 lakh. Though the increase is only Rs.50,000, large sections of taxpayers would benefit. The deductions cover many areas, including investment in PP, employees provident fund contributions, and tuition fees for children.
Practicable options For many hard-pressed salary earners, savings through Sec.80C are the only practicable savings options.
Within this Sec.80C category, the budget has allowed higher contribution — the limit for PPF alone has been increased to Rs.1.5 lakh from Rs.1 lakh. Anyone who has exhausted other tax savings options can invest in PPF because it has a higher limit.
(c) Interest on housing loan “the limit for deduction towards interest on housing loan for self-occupied property has been increased by Rs.50,000 to Rs.2 lakh. This is a very nominal increase considering the huge escalation in the cost of housing properties anywhere in India.
Experts estimate that individual tax payers (not in the senior citizen category) will get tax benefits ranging from Rs.15,500 to Rs.36,000 depending on income levels.
The purpose of this column is not just to estimate benefits to taxpayers but to identify certain other steps that the budget has not considered but can ease the burden of the common man.
Widespread technology adoption by the financial sector is welcome.
But are the users, let’s say bank depositors, comfortable with interfacing banks through a computer?
There is a widespread alienation — cannot expect all common people to be net savvy.
Certain other announcements such as one single KYC for all financial sector and a single demat account are welcome. But the transition is not going to be as easy as the budget assumes. Both investors and the bank staff need to be educated.
narasimhan.crl@thehindu.co.in
