The last part of the Budget was devoted to direct and indirect tax proposals. For individuals, the investment limit in public provident fund has been raised from Rs 1 lakh to Rs 1.5 lakh. In case of individuals below 60 years, the exemption limit has been raised from Rs 2 lakh to Rs 2.5 lakh whereas for senior citizens, the exemption limit has been increased from Rs 2.5 lakh to Rs 3 lakh. Even the exemption limit under section 80C has been raised from Rs 1 lakh to Rs 1.5 lakh. Apart from this the deduction limit available on interest on housing loan has been increased from Rs 1.5 lakh to Rs 2 lakh.
After recovering the Indian indices have spurted ahead as a number of proposals were announced to encourage savings and provide a boost to the manufacturing sector. Mid and small caps have also recovered smartly.
The BSE-Sensex is trading up 244 points. The NSE-Nifty is trading up 80 points. The BSE Mid Cap index is trading down 1.1% and the BSE Small Cap index is trading up 0.9%. The rupee is trading at 59.73 to the US dollar.
The Finance Ministry has announced a number of indirect tax proposals to provide a fillip to the manufacturing sector. The government has reduced the customs duty on palm oil derivatives and crude glycerine. This likely to benefit soap and oleo chemicals manufactures. Additionally, CRT televisions have been exempted from duty and even the duty on LCD and LED televisions below 19 inches has been reduced to nil. Thus TV sets are likely to become cheaper. The customs duty on different coal types has been rationalized.
In case of excise duty, the government has announced a number of concessions. The excise duty on the food processing machinery has been reduced to encourage the Food industry. Even the duty on footwear priced between Rs 500-1000 has been slashed to give a boost to small and medium footwear players. However, the excise duty on cigarettes, cigars, gutkha, pan masala and aerated waters has been raised.