JOIN USFinance Minister P Chidambaram in his Budget spared the common man of new taxes and gently tapped the “super-rich” even as he gave a small relief of Rs 2,000 for persons with income up to Rs 5 lakh per annum.
The minister, who did not go for raising income or excise taxes across the board, kept the tax slabs unchanged at 10, 20 and 30 per cent.
There is good news for first-time home buyers who will get an additional deduction of interest of Rs 1 lakh for home loans above Rs 25 lakh and Rs 1.50 lakh for home loans up to Rs 25 lakh. “This will be over and above the current Rs 1 lakh deduction allowed for self-occupation,” Chidambaram said, presenting his budget.
The “super rich” will have to pay more. A total of 42,800 Indians have been slapped a surcharge – not tax – of 10 per cent on income of Rs 1 crore and above for one year and a 5 to 10 per cent surcharge on domestic corporates whose income exceeds Rs 10 crore a year. According to the minister, in the case of foreign companies, who pay a higher rate of corporate tax, the surcharge will go up from 2 to 5 per cent. On dividend distribution tax, he proposed to raise current surcharge from 5 to 10 per cent. The tax proposals are to raise an additional Rs 18,000 crore.
The sop of Rs 2,000 on those earning up to Rs 5 lakh will benefit 1.8 crore tax payers, entailing a revenue sacrifice of Rs 3,600 crore.
While he imposed an inheritance tax of 1 per cent on transfer of immovable property of over Rs 50 lakh, Chidambaram, continuing the education cess for all tax payers at 3 per cent, promised that the new surcharges will be in force for just a year during 2013-14.
While the direct tax proposals will bring in Rs 13,300 crore, those on indirect tax side will rake in Rs 4,700 crore.
Even as he proposed the surcharge on the super rich, Chidambaram said, “I believe there is a little bit of the spirit of Mr Azim Premji in every affluent tax payer. I am confident that when I ask the relatively prosperous to bear a little more burden for one year, just one year, they will do so cheerfully” as he referred to the chairman of Wipro, one of the richest men in the country who is also known for his philanthropy.
Observing that the other slabs and rates have been kept unchanged in view of the financial situation, he remarked: “In a constrained economy, there is little room to raise tax rates or large amounts of additional tax revenues.
Equally there is little room to give away tax revenues or the tax base. It is time for prudence, restraint and patience.”
The budget proposes, in a bid to eliminate tax evasion through under-valuation and under-reporting in property sale, a TDS of 1 per cent on all transfers of immovable properties for a consideration above Rs 50 lakh.
Agriculture land will however be exempted from this. While Securities Transaction Tax (STT) has been marginally reduced, the minister introduced a new Commodities Transaction Tax (CTT) on non-agricultural commodities futures.