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  • : Budget 2008-09: The 10 that matter

    Budget 2008-09: The 10 that matter

    Not willing to disappoint any section of the voting class, the Union Budget speech delivered by Finance Minister P. Chidambaram today was calibrated to satisfy almost all segments of the population. From aggressively raising the cause of farmers to supporting higher education to offering medical benefits to sops for women and senior citizens, the Budget almost sounded perfectly rounded. The enhanced income tax exemption limits were the icing on the cake. However, what left us disappointed was the fact that Budget ignored the necessary reform measures, especially in the PSU sector that would have set the ball rolling for economic growth in the coming fiscal as well. Here are the 10 key measures that we believe are the lead points of the Budget announced today.

    • PSU banks and regional rural banks (RRBs) to offer debt waiver on all agricultural loans disbursed upto March 2007 and due until the end of December 2007. Complete debt waiver on all loans given to small and marginal farmers. The banks will also launch one time settlement (OTS) scheme in respect of other farmers for all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. Rebate of 25% against payment of the balance of 75% under OTS.

    • Government to set up 16 central universities in each of the hitherto uncovered states, set up three IITs, one each in Bihar, Rajasthan and Andhra Pradesh; two IISERs at Bhopal and Tiruvananthapuram, and two Schools of Planning and Architecture at Bhopal and Vijayawada.

    • Revenue deficit for 2007-08 to be 1.4% (against a budgeted estimate of 1.5%) and the fiscal deficit to be 3.1% (against a budgeted estimate of 3.3%). Revenue deficit for 2008-09 estimated at 1.0% of GDP, fiscal deficit for 2008-09 estimated at 2.5% of GDP.

    • Excise duty reduced on small cars reduced from 16% to 12% and on hybrid cars from 24% to the general revised rate of 14%. Excise duty reduced on two wheelers and three wheelers from 16% to 12%.

    • Threshold limit of exemption from personal income tax in the case of all assesses increased to Rs 150,000. The slabs and rates of tax are:

      • Up to Rs 150,000 - NIL

      • Rs 150,001 to Rs 300,000 - 10%

      • Rs 300,001 to Rs 500,000 - 20%

      • Rs 500,001 and above - 30%

      In case of a woman assessees, the threshold limit has been increased from Rs 145,000 to Rs 180,000. For senior citizens, the threshold limit stands increased from Rs 195,000 to Rs 225,000.

    • No change in the corporate income tax rates. No change in the rate of surcharge.

    • Senior Citizen Saving Scheme 2004 and the Post Office Time Deposit Account added to the basket of saving instruments under Section 80C of the Income Tax Act. Additional deduction of Rs 15,000 allowed under Section 80D to an individual paying medical insurance premium for his/her parents.

    • Rate of tax on short-term capital gains under Section 111A & Section 115AD increased to 15%.

    • STT (securities transaction tax) paid to be treated like any other deductible expenditure against business income. Commodities Transaction Tax (CTT) to be introduced on the same lines as STT on options and futures.

    • Banking Cash Transaction Tax (BCTT) being withdrawn with effect from April 1, 2009.

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