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Budget 2011-12: Don't pop the champagne open just yet

Chaitanya Kalbag     February 28, 2011
So here's a reality check. We expected income-tax exemption limit to be raised to Rs 2 lakh per taxpayer. Pranab Mukherjee has raised it to Rs 1.8 lakh from Rs 1.6 lakh.  That means an extra Rs 2,000 in every taxpayer's pocket; a quick calculation translates this to two bottles of local bubbly, which means you can cheer yourself up about every six months.

If you want to munch on pistachios while celebrating, be aware that customs duty on raw pistachios has been cut to 10 per cent from 30 per cent.  A similar cut in duty on bamboo used in making agarbattis means your home can smell better cheaper.  If all this is giving you ulcers, homoeopathic medicine will get cheaper, as will diapers.  Now there's a mystery.

Incidentally, the government is making it easier for you to take out more and more money from the "hole in the wall", a.k.a. your favourite ATM or cash dispenser.  It has exempted imports of cash dispensers from customs duty, and from all parts used to manufacture them domestically.

If you are retired, however, there is some cause for cheer.  You will qualify as a senior citizen at 60, not 65; your tax exemption limit will go up to Rs 250,000 from Rs 240,000.  If you are 80 years or older, your exemption limit will be Rs 500,000.

Mukherjee has extended a one percentage-point reduction in interest rates on housing loans of up to Rs 15 lakhs for homes costing up to Rs 25 lakhs; this will clearly benefit lower-income homebuyers.  Priority sector lending will now cover dwellings costing up to Rs 25 lakh.

The elderly among India's poor will also benefit - they will be eligible for a pension at age 60 under the Indira Gandhi National Old Age Pension Scheme for BPL (below poverty line) beneficiaries.  For the very old and poor, the monthly pension has been raised to Rs 500 from Rs 200.

Planning to go back to your roots?  If you are a farmer taking short-term crop loans and repay your debts on time, you will pay only 4 per cent interest.  Even better if you are an organic farmer - the government will encourage green manuring, biological pest control and weed management.

As for food prices, Mukherjee waved his "300-crore wand".  He bemoaned the fact that despite prices dropping from painful highs, consumers have not benefited because of "shortcomings in distribution and marketing systems".  He announced a number of outlays - all of them at a whimsical Rs 300 crore - for the development of 60,000 "pulses villages" in rain-fed areas; for bringing an additional 60,000 hectares under oil palm cultivation; for "vegetable initiatives"; for higher cereal output by helping up to a million millet farmers in arid and semi-arid areas; fodder development in 25,000 villages to boost milk production; and for a National Mission for Protein Supplements to promote livestock development, dairy farming, "piggery", goat rearing and fisheries (in other words, as Indians slowly acquire more spending more disposable income, they are consuming more proteins).

All of which should hopefully help you buy more and nutritious food with the money you earn.

But wait! If you aspire to a slightly more comfortable lifestyle, you have another think coming.  The Finance Minister has slapped a 5 per cent service tax on any hotel room that costs more than Rs 1,000 a night.  And if you fancy a tipple in an air-conditioned restaurant, you will now pay a 3 per cent service charge. And if all this is making you feel ill, be advised that going for a check-up, diagnostic tests or treatment at any air-conditioned hospital with more than 25 beds will mean you pay a service tax of 5 per cent.  Of course you do not pay any service tax if you get yourself to a government hospital. We love those, don't we?

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