As soon as Finance Minister P Chidambaram presented the Union Budget for 2007-08 in the Lok Sabha on Wednesday, queries thronged taxpayers' minds. Has Chidambaram made their lives easier or has he burdened them more?
In an hour-long chat with Mahesh Padmanabhan, one of the head honchos of Relax with Tax, readers clarified their doubts. Here is the transcript:
Mahesh Padmanabhan says, Hi This is Mahesh from RelaxwithTax
Kiran asked, Is there any steps proposed to bring all non-tax payers (black money, surplus agriculture income etc)in to IT limit??
Mahesh Padmanabhan answers, at 2007-02-28 14:03:25In this regard the Banking Cash Transaction Tax Act has been proposed to be continued albeit with an enhanced exemption limit of Rs. 50000 from the current Rs. 25000 for individuals. This would draw out the cash movements in the system and provide a trail for tracking black money.
sunil asked, Is there any change in freindge benfit tax?, interms of percentage and the items that come under it.
Mahesh Padmanabhan answers, There is no chnage in the FBT excepting that ESOPs have been brought under the scope.
aks asked, Hi Mahesh, what is threshold limit? one side, it says there is no increase in tax limit and other side it says 10,000 is increased ? what is this?
Mahesh Padmanabhan answers, threshold limit for male individuals has been enhanced to Rs.110000; for female individuals - Rs.145000 and for senior citizens (age more than 64 years) - Rs.195000. i.e. an increment from the original exemption limits by Rs.10000.
Prash asked, Hi Mahesh, The tax exemption limit has been eincreased to Rs. 1,10000 which anyway existed last to last year (with Section 80CCC). What is the big favour that the FM has sone to the salaried class apart from reverting back to the same limit?
Mahesh Padmanabhan answers, The basic exemption limit last year was Rs.100000 with an additional deduction under Sec 80 including 80C and 80CCC of Rs.100000 taking the total zero-tax status to Rs.200000 of Gross Total Income. With the current change, this Rs. 2 lakhs has been enhanced by additional Rs.10,000 for male individuals.
Satyajit asked, What about 80C? Any change in limit? Will PPF,ULIP,ELSS will be EET?
Mahesh Padmanabhan answers, The budget speech did not mention about any change in the limits or eligible investments under Sec 80C. Also, EET has not been discussed in the budget speech which needs to be checked from the print of the Finance Bill.
sudhir asked, What is the good/bad news for salaried class in this budget
Mahesh Padmanabhan answers, The good news: 1)Increase in basic exemption limit by Rs.10,000 2)Increase in mediclaim insurance deduction under Sec 80D from the current Rs.10,000 (normal individuals and Rs.15,000 (including senior citizens) to Rs.15,000 and Rs.20,000 respectively. 3) Reduction in indirect taxes (customs, excise and sales tax) would bring relief to individuals in terms of reduced prices. Bad news: 1) FBT on ESOPs 2) Increase in excise on cement which will increase the real estate prices 3) Increase in Dividend Distribution Tax would ensure that you would get lower dividend as compared to last year.
meow asked, With such a budget can we relax?
Mahesh Padmanabhan answers, Often budgets may not be good from the short term perspective, but may have long term positive implication. Lets wait and watch how this budget really shapes up the economy as also brings about a reduction in the inflation rate and fiscal and revenue deficit.
ss asked, Hi mahesh, could you provide with details on this additional 10K relief to individual persons, does it mean that i can invest upto 1.1Lakh p.a?
Mahesh Padmanabhan answers, The additional Rs. 10,000 has been given to the basic exemption limit and not to the investment limit under Sec 80C. The limit under sec 80C still remains at Rs.1 lakh.
SKOJHAMUMBAI asked, what is the base limit for service tax now from earlier rs 4.00 lacs
Mahesh Padmanabhan answers, The base exemption limit has been proposed to be increased to Rs.8 lakhs from teh current Rs. 4 lakhs.
dhiraj asked, what is the maximum limit for investing ppf account
Mahesh Padmanabhan answers, It is Rs.70,000.
ranjana asked, Hi Mr. Mahesh, So many promises and proposals by the FM! As a common people (Aam admi) how do you rate this budget?
Mahesh Padmanabhan answers, AS far as the aam aadmi is concerned, the implementaion of the budget proposals is more important than the intent of the proposals. I would rate this budget at 3 out of 10.
MuraliK asked, Hi Mahesh, What is the use of raising It slab from 1 Lac to 1.1 Lac and then pushing Edu cess. from 2% to 3%. Isn't this a deeper hole in the pocket of people earning more than 1.1L? Today if we see most of the age group from 20 to 30 are earning more than 1.5Lakhs
Mahesh Padmanabhan answers, Your calculation is not entirely wrong. However, arithmatically an individual male having taxable income (after deduction under sec 80C) less than Rs.5,10,000 will benefit from this step. Any incremental salary above Rs.5,10,000 would increase the tax outgo in terms of increased education cess.
rdeasy asked, Hi Mahesh, Is there any changes to tax structure for NRIs in this budget?
Mahesh Padmanabhan answers, No specific amendments to NRI taxation has been mentioned in the budget speech. However, RRBs (Regional Rural Banks) would also be eligible to accepts NRE and FCNR deposits.
stiw asked, EET on PPF withdrwals ..there is no mention. so we can relax?????
Mahesh Padmanabhan answers, The fine print of the Finance Bill needs to be checked before we can relax.
virender asked, what is change in corporate tax rate. i hav read 19.5% effective rate for company at indiatimes .com
Mahesh Padmanabhan answers, Effective tax rate for normal corporate entites (not covered by Minimum Alternate Tax) has increased from 33.66% to 33.99% due to increase in education cess by 1%. However, the FM has provided a relief to the SME sector (whose gross income is below Rs.1 crore) by exempting the payment of surcharge.
GIRI asked, Will there be any any price cut in computer/laptop or its allied products? Please answer. Many have the same question....but none has an answer..Can u help mahesh?
Mahesh Padmanabhan answers, No specific mention has been made in the budget speech with respect to the mentioned category of products. However, we need to look at the fine print to understand the impact on these products.
jafer asked, I am 61 years old. whether i will be considered as senior citizen for income tax purpose?
Mahesh Padmanabhan answers, Individuals equal to or above 65 years of age are considered as senior citizens from the perspective of income tax. There was a pre-budget proposal of reducing the elgible age from 65 years to 60 years. However, the FM's budget speech does not make a mention of such modification.
sunil asked, Is there any menction on the Meiclaim?
Mahesh Padmanabhan answers, Yes. The FM has proposed to increase the limit under Sec 80D (mediclaim insurance) from the existing Rs.10,000 (normal individuals) to Rs.15,000 In case of senior citizens the limit has been increased frm rs.15,000 to Rs.20,000.
kalyan asked, Hi Mahesh, is there any change in income tax computation method
Mahesh Padmanabhan answers, method of computing income tax has not been changed excepting that the basic exemption limit has been increased by Rs.10,000.
pchauhan asked, hello sir ihave a recruiting co. we charge service tax from our clients I have a query that if the total income is below 4lac then also we have to pay service tax.If yes will it be paid on amount above 4lac or totalincome pls help
Mahesh Padmanabhan answers, As per the current position, if your total billing (including re-imbursements) is above Rs.4 lakhs, then you are liable to pay service tax on the entire billing amount. However, in the current budget, the FM has proposed to increase the exemption limit to Rs.8 lakhs.
Mahesh Padmanabhan says, Friends. Thank you for posting your questions. We will be signing off for now