Resisting the temptation of election-year populism, the general Budget today offered no major tax sops but slapped a surchage on 'super-rich', raised duties on mobile phones, cigarettes and imported luxury vehicles and imposed a levy on property sale above Rs 50 lakh.
Presenting UPA-II's last full-fledged Budget ahead of net year's general Elections to net in an additional Rs 18,000 crore, Finance Minister P Chidambaram did a tight rope walk balancing growth needs with fiscal prudence by stepping up expenditure in social sectors and cutting subsidies.
In a Budget that pegs fiscal deficit at 4.8 per cent of GDP, Defence allocation has been stepped up by 14 per cent over the revised expenditure in the current year to Rs 2,03,672 crore in the next.
Without changing the basic slabs and rates in income tax rates, Chidambaram gave a benefit of Rs 2,000 to individual tax payers with taxable income of up to Rs 5 lakh, that will benefit 1.8 crore tax payers entailing a revenue sacrifice of Rs 3,600 crore.
First-time home buyers 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.
The much-talked about 'super-rich' tax was levied as a 10 per cent surcharge on "relatively prosperous" persons with an income over Rs 1 crore.
Similarly, on domestic corporates with taxable income of Rs 10 crore, the surcharge has been raised from 5 to 10 per cent. Foreign companies will pay an increased surcharge of 5 per cent, up from 2.
The Finance Minister proposed that the surcharges will be in existence for just a year, while continuing the 3 per cent education cess on all tax payers.
In a bid to eliminate tax evasion through under-valuation and under-reporting in property sale, the Budget proposes a TDS of one 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.
In indirect taxes, the Budget does not make any change in the peak Customs and Excise Duties or Service Tax, but it sharply raised import duty on high-end luxury cars, motorcycles and yachts from