Prime Minister Narendra Modi said the new tax rule would benefit around 3 crore people (Representational)
The farmers and the middle class were the biggest focus areas of the government in the last budget presented today before the general elections. The measures have drawn barbs from the opposition Congress, which has described it as an "election budget".
The much-awaited cash transfer benefit for farmers drew the most criticism - the Congress said Rs 6000 a year was a meager amount and an insult to farmers. Not much, however, has been said about the alterations in taxes for the salaried class, which include a complete exemption for people who earn less than Rs 5 lakh a year.
The government said that counting in investments and savings under prescribed schemes, even people who earn Rs 6.5 lakh a year will not have to pay taxes.
Currently, those who earn above Rs 2.5 lakh a year had to pay 10 per cent tax. Prime Minister Narendra Modi said the new rule would benefit around 3 crore people and their families.
There are other benefits too for the middle classes:
- Standard deduction for exemption has been increased from Rs. 40,000 to Rs. 50,000 for the salaried class
- The limit for gratuity has been increased from Rs 10 lakh to Rs 20 lakh
- 3.There will be no tax deduction at source for interest received from investments at banks and post office for sums upto Rs 40,000.
- People who are planning to sell property also get a breather on capital gains tax - the tax paid on the profit in such cases. Those who get a profit of up to Rs 2 crore will not have to pay tax if they invest the money in not one, but two properties.
- The cap for tax on house rent received, has been upped from Rs 1,80,000 to Rs 2,40,000.
- There will be no notional rent on a second property owned and occupied by the same family.
Dubbing the interim budget "An account for votes instead of a Vote on Account", former finance minister, Congress's P Chidambaram, said the tax benefits cannot translate into reality unless it receives the approval from the next government.
"The mist that wraps this budget will lift tomorrow and people will see the desperation and recklessness of the government," Mr Chidambaram said.