A tiny sop for the salaried class!

The single piece of the Budget speech that is largely awaited by many is the Direct Taxes on Individuals and perhaps many were disappointed by what they got.

Given that the Minister himself admitted to the high rise in inflation, the increase of just Rs.10000 per annum in the exemption limit (which amounts to a tax saving of Rs.1000 per annum or less than Rs.90 per month) across the various categories like general, women and Senior Citizens is clearly inadequate.

This is understandable from the political perspective where there is no lobby for individuals in the tax bracket and hence there is no real need to address their genuine concerns.

Without waiting for the FM’s show of largesse, can we have a mechanism by which IT exemptions would be indexed to cost of living and inflation and announced on an yearly basis?

What do you think?



  1. labsji said,

    February 28, 2007 at 1:02 pm

    Way to go Badri!
    Let the government feel the pinch of Inflation!
    But the beanies( accountants) will have a filed day guiding the hapless tax payer.

    -Balaji S.

  2. badrirag said,

    February 28, 2007 at 4:59 pm

    Thanks Balaji. The Government will never feel any pinch because they are always used to spending more than they earn and would not consider it their personal problem.

  3. February 28, 2007 at 6:29 pm

    I really feel the budget has not done good for the average middle class which comprises such a masstive population in India.

    (Blogger at http://thoughtsprevail.blogspot.com)

  4. badrirag said,

    February 28, 2007 at 7:37 pm

    You are bang on target Himanshu. One of the biggest attractions for the MNCs (then and now, notwithstanding the hype on the size of the market) is the huge middle class market in India but that is not given the due importance by our own government.

  5. geetha said,

    March 2, 2007 at 5:06 am

    The salaried class is the worst affected with the rising inflation. As written by you,as there is no lobbying for individuals , they are remaining quite.

  6. March 2, 2007 at 5:30 am

    I’m not sure why this is required. We should simply remove all exemptions and have a flat tax of (say) 20% for all income above a limit, say Rs. 200,000. Basically the first 200,000 is yours, and the rest is taxed at 20%. Exemptions are usually retrograde. Some are expenses (insurance, school fees etc.) and others are investment (ELSS, PF etc) and honestly this makes very little sense (why allow these expenses and not others, and why allow these investments and not others?

    We should eliminate exemptions in the long run – increase the minimum tax limit to the point where all the reasoning for the exemptions can be accomodated, and tax everything else. Exemptions complicate taxes!

  7. badrirag said,

    March 2, 2007 at 6:18 am


    Now is the opportunity for us to take action and not remain as victims or observers. Please write to the FM, write in the print media and other forum so that our voice is heard

  8. badrirag said,

    March 2, 2007 at 6:37 am

    That is a daring proposal Deepak but no government will have the political guts and courage to do that. This is because they want to keep a hold on people at all levels either by taxation or by subsidy. I am reminded of the book Atlas Shrugged by Ayn Rand where one character tells another that rules have been drafted not for people to obey but to make it difficult for them to do so and once they violate the rules they are forever in the grip of the rulers. And that is what is happening here as well

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: