Budget 2013: Impact on your taxes, investments & spending
March, 04th 2013
The tax proposals in the Budget have disappointed most taxpayers. Noida-based school teacher Maria Amin is among the 1.8 crore taxpayers who will get a tax credit of Rs 2,000 next year, reducing her tax liability by almost 30%.
But she feels that in absolute terms the benefit is so pitifully small that it won't make a difference. "It will reduce my tax by barely Rs 172 per month, provided my income does not go beyond Rs 5 lakh in the coming year," she says derisively.
In Chandigarh, retired PSU manager Prahlad Kumar Wahi is fuming that the budget neither raised basic exemption limit nor increased the tax saving limit under Section 80C.
Last year's budget had raised the basic exemption for senior citizens by Rs 10,000 to Rs 2.5 lakh and given all taxpayers an additional exemption of Rs 10,000 for savings bank interest.
But this year, despite an 8.5% rise in inflation in the past 12 months, there is no change in the exemption limit. "The budget should have at least done something for senior citizens who have a fixed income but growing expenses," groans Wahi.
Millions of taxpayers will agree with Wahi. One of them is Mumbai-based finance professional Vaibhav Pandya. "The budget was a complete non-event for me. I was hoping the home loan deduction limit would be raised or the tax saving limit would be increased," he says. The Rs 1.5 lakh deduction on home loan interest was fixed in 1999 when the average price of a 2-bedroom house in a metro city was Rs 20-22 lakh.
Today, you would be lucky to get one for Rs 70-80 lakh. Similarly, the Rs 1 lakh tax saving limit was set in 2005 with the introduction of Section 80C. Seven years later, the consumer inflation index has risen by more than 70% but the tax saving limit has remained static at Rs 1 lakh. Three years ago, the government had introduced an additional limit of Rs 20,000 for infrastructure bonds under Section 80CCF but last year's budget removed it.