With the last full-fledged Budget of the UPA government, Finance minister P Chidambaram might spread cheer all around with Budget 2008-09. A hike in the income-tax exemption limit from Rs 1,10,000 to Rs 1,25,000., a higher ceiling for tax-saving investments along with a wider range of products under this category, and a rejig in tax slabs are some of the key proposals being considered by the UPA government. Corporate tax payers can expect some relief in the form of removal of surcharge.
A final call on direct taxes will be taken at “the highest political level”, since this will be the UPA government’s last full Budget. Budget 2009-10 will be a vote on account, as a new government has to be put in office by May 2009.
An increment in the current investment exemption limit of Rs 1,00,000 to Rs 1,50,000 is also being considered with a view to channelise some savings into the infrastructure sector. In accoumt of this, the government could provide tax reliefs to investments in special infrastructure bonds and dedicated funds.
The government has also expanded the number of eligible for tax exemption by adding a senior citizen scheme and a five-year post office time-account.
According to the sources, the change in the personal tax slabs is still in a bewildered state.
The government is also reviewing the 10% surcharge. In the last Budget, the finance minister had partially relieved companies with an income of Rs 1 crore or less and individuals with income below Rs 10 lakh of this burden.
This year’s Budget also comes against the backdrop of the sixth Pay Commission recommendations. The finance minister is expected to make an announcement on government employees’ pay revision in this Budget, though the commission is to submit its report by April this year,