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Greatly disappointing personal income tax payers, Finance Minister P Chidambaram’s Budget for 2007-08 proposed a marginal Rs 10,000 increase in threshold tax exemption limit, while foisting an additional one per cent education cess on them.

In the backdrop of rising prices and high inflation, taxpayers were expecting increase in exemption limit by Rs 30,000 to Rs 50,000. But the threshold limit now stands at Rs 1,10,000 against Rs 1,00,000 earlier.

The increase in exemption limit, which will provide a relief of Rs 1,000 to Rs 2,000, will be partly neutralised by increase in education cess from 2 per cent to 3 per cent.

This has to be paid not only on income tax but also on all products and services covered under excise, customs and service tax.

Finance Minister has also put additional burden on taxpayers investing in stock markets by raising dividend distribution tax from 12.5 per cent to 15 per cent.

The Budget proposes to increase the income tax exemption limit from Rs 1,00,000 to Rs 1,10,000.

For women, the exemption limit has been raised from Rs 1,35,000 to Rs 1,45,000, and for senior citizens from Rs 1,85,000 to Rs 1,95,000. (with PTI inputs)

Indian industry has expressed disappointment over Finance Minister P Chidambaram’s Budget for 2007-08, raising concerns on lack of measures to increase productivity and for losing an opportunity to provide relief to the corporate sector.

“This budget is disappointing as there has been no steps announced to increase productivity in agriculture, electricity and other sectors which are not producing up to their potential,” R Sesashayee CII President said.

He pointed out since revenues from peak customs and excise were increasing, this could have been a time to reduce excise duty to 20 per cent, if not 15 per cent overall, which would have been in line with Kelkar Committee Report.

FICCI President Habil Khorakiwala said a wrong signal has gone to the corporate world as the government has increased cess and dividend distribution tax.

Mr. Speaker, Sir

It is my privilege to present the Budget for 2007-08.

I. A MID-TERM REPORT CARD ON THE ECONOMY

2. In November 2006, the UPA Government crossed the midpoint of its term of office. A midterm report card can now be presented. There are many pluses and a few minuses, and I shall deal with both candidly. The biggest plus is that the growth rate of GDP has improved from 7.5 per cent in 2004-05 to 9 per cent (Quick Estimate) in 2005-06 and, according to Advance Estimate, to 9.2 per cent in 2006-07. The average growth rate in the three years of the UPA Government is, therefore, 8.6 per cent. Thanks to this impressive performance, despite the poor start in 2002-03, the growth target set for the Tenth Plan of 8 per cent will be nearly achieved.

3. Manufacturing is the main driver of growth, and this augurs well for the future.

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India Inc on Monday hailed the Railway Budget as promising and said measures, especially those on containers and freight services, will not only help the industry but benefit the general public as well.

Industry chamber CII welcomed the freight rate cuts on petrol, diesel and iron ore saying it would have an overall positive impact on the economy.

“The freight impact on the industry is in the right direction and general approach of the budget was to improve efficiency and higher output,” CII Chairman Railways Equipment Division, JP Choudhary said.

“The decision for increased investments on container traffic by running more trains is a welcome step. It will bring down cost to end users and help in the long run to improve railway services,” Gateway Distriparks (Rail Freight) CEO Sachin Bhanushali said.

Freight rates

Lalu Prasad refrained from hiking freight rates, while reducing rates for transportation of diesel/petrol by five per cent and six per cent on iron ore and limestone.

“The minister is taking innovative measures and if this tempo continues Railways will be one of the pillars of our growth in the coming years,” CII’s Choudhary added.

Assocham also welcomed the Railway Budget for successfully linking old economy with the new and taking full advantage of modern technology.

“Besides, facilities provided to the economically weaker sections, traders, physically challenged and senior citizens and others are welcome,” Assocham Secretary General D S Rawat said.

Low-cost airlines, while welcoming the announcements made by Lalu Prasad, said that the fare cuts would not have much impact on the cost of air travel.

“The numbers are huge but it would not impact low cost air travel. We will not revise our fares as almost our fares are below first and second class AC,” Air Deccan Chairman and Managing Director G R Gopinath said.

Kingfisher Airlines Director A K Ravi Nedungadi also said that the fare cut by Railways would not have any negative impact on the airline industry.

Better resource utilisation

FICCI President Habil Khorakiwala said the Railway Minister has bet his budget on a buoyant economy and the fact that he has cut passenger fares and refrained from increasing freight rates suggests that Railways is now working like a private sector corporation.

“This is a good news for India and wish that other public service areas like education and health would also follow the Railway example,” he said.

Shanti Narayan, Member, Railway Board (Traffic), while welcoming the announcements on freight corridors said there was a need to find ways to increase capacity by other means as well.

On February 28, 2007, Finance Minister P Chidambaram will present the Union Budget for the fiscal year 2007-08. We present to you some FAQs on the event.

What is Budget?

A Budget is a plan that outlines a nation’s financial and operational goals. So the Budget may be thought of as an action plan; planning a Budget helps a business allocate resources, evaluate performance, and formulate plans.

The ‘Annual Financial Statement’, laid before both the Houses of Parliament constitutes the Budget of the Union government. This statement takes into account a period of one financial year. The financial year commences in India on April 1 each year. The statement embodies the estimated receipts and expenditure of the Government of India for the financial year.

Why do we need the Budget?

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