Tax cut for salaried class but little for poor, nothing to spur employment

PTI

New Delhi:  Presenting the Narendra Modi government's last full Budget before the general elections in 2024, Finance Minister Nirmala Sitharaman on Wednesday unveiled tax rebates and saving plans to woo the middle class, women and pensioners, and announced massive spending on housing and infrastructure as she walked the tightrope between staying fiscally prudent and meeting public expectations.  

The personal income tax rebate limit has been increased to Rs 7 lakh from the fiscal year starting April 1 under the new tax regime, from the previous Rs 5 lakh. Tax slabs have been cut to five from seven earlier. Also, the maximum income tax rate has been reduced to about 39 per cent from 42.7 per cent after a reduction in the highest surcharge to 25 percent from 37 percent.

Besides, the deposit limit for senior citizen savings schemes has been doubled to Rs 30 lakh and for Monthly Income Account Scheme to Rs 9 lakh. A new small savings scheme for women, offering 7.5 percent interest rate on deposits of up to Rs 2 lakh for a tenor of 2 years, has also been announced.

Sitharaman's fifth straight Budget comes at a time when the economy is slowing due to global headwinds and there is a need for increased spending on social sectors as well as ramping up incentives for local manufacturing. She also announced customs duty relief on mobile phone components, as well as on capital goods for lithium batteries and other such items to boost green energy and exports.

This is the final full Budget before the general elections in April/ May next year. An interim budget, called vote on account, is to be presented in February next year and the new government will present the full Budget sometime in July 2024.

The capital investment outlay has been increased steeply for the third year in a row by 33 percent to Rs 10 lakh crore, which would be 3.3 per cent of the GDP. Also, the outlay for affordable housing has been increased by a massive 66 per cent to Rs 79,000 crore.