The finance minister has been quite charitable to the common man this time. As an ordinary middle class salaried person, you will pay lower taxes, spend somewhat lesser on most of your regular items and earn a better return on your investments.
Most consumer goods of daily use will cost almost the same, while consumer durables such as air-conditioners, white goods and cars will become cheaper. But you will have to spend a bit more on transport as petrol and diesel will be a trifle more expensive because of an additional cess.
Not immediately, but soon you can look forward to travelling on better roads, get set to enjoy the luxury of some sports complex which may come up near your house very soon. You may also soon see more hospitals being set up, even as the existing ones would now offer you state-of-the-art medical equipment more quickly than even before.
Contrary to the general trend, there are no changes in the income-tax rates this year, but the hike in the standard deduction and the elimination of surcharge for individuals will mean that you will end up paying lesser taxes. For taxpayers in the higher income tax bracket (above Rs 8.5 lakh), however, the tax incidence will work out marginally higher since the surcharge has been doubled to 10 per cent.
For the middle class parents, there is now more incentive to spend more on children's education. Depending on your salary level, you can save tax up to Rs 4,800, since the budget has proposed to extend tax rebate under Section 88 to educational expenses up to Rs 12,000 per child for two children.
Even on your 'other' sources of income, that is, interest, dividends, the exemption limit is raised to Rs 15,000, which includes Rs 3,000 exclusively for income from government securities. This is particularly beneficial for marginal tax payers.
Again, for persons planning to opt voluntary retirement, payments up to Rs 5 lakh will be exempt even when taken in instalments.
The decision to continue the deduction allowed on interest on housing loans also come as a major relief. This is one Kelkar panel recommendation, that the finance minister did not effect.
For the last two years, if there has been one sour point with ordinary people, it has been the continuous reduction in small savings rates. This time also, the finance minister has cut interest rates on small savings instruments and the public provident fund (PPF) by one percentage point.
However, the rate cut might not hurt much as the inflation rate is also down compared to previous years'. This only means that the real rate of interest -- interest rate after accounting for price rises -- that you earn will still be the same. Even now the PPF remains the most attractive guaranteed income product available in the market.
As a senior citizen, however, you will enjoy privileged treatment. There are a number of sops for them in the Budget. Firstly, the Life Insurance Corporation is likely to launch pension plan for senior citizens, with guaranteed income at the rate of 9 per cent per annum, for pension per month of Rs 250 - Rs 2000.
Besides, in respect of tax deductible at source, in case of senior citizens self declaration will be acceptable.
Again for the physically challenged, there are some sops. Physically handicapped persons or people such with dependants can now claim a deduction of Rs 50,000 in case of permanent physical disability and Rs 75,000 for severe disability.
A number of equipment, for example, hearing aids and wheel chairs will also be cheaper now as they will attract lower duty. Drugs, particularly of the life saving kind will now be cheaper as will enjoy concession duty.
From an investment point of view, individuals will find it more profitable to invest in equities as dividends will now be tax free and share acquired after April 1, will not attract any long term capital gains tax.
Overall, the finance minister's budget proposals are friendly for the ordinary man, even if they do not take care of all your 'life-time' concerns.
