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Fri, 16 Mar 2012 17:06:13 GMT

Mukherjee puts money in one pocket, takes out from others

Every tax payer in India is set to gain at least Rs.2,000 per annum, thanks to the relief proposed by Finance Minister Pranab Mukherjee. But the happy story ends there! With a hike of 2 percentage points in service tax and higher excise and customs duty on a host of other items, your household budget is actually set to rise.

Mukherjee's budget promises tax relief, subsidy cut, reforms

In his seventh national budget presented in the Lok Sabha Friday, Mukherjee raised the income tax exemption limit for individuals to Rs.2,00,000 from Rs.1,80,000 and revised the tax slabs to bring relief to some 35 million people in the country.

But by bringing virtually all services under the tax net and by hiking the rate from 10 percent to 12 percent -- as also by raising the standard excise rate to 12 percent from 10 percent -- he also ensured you pay more indirect taxes than before.

This is why the net impact of his proposals is such that while direct tax measures will result in a net revenue loss of Rs.4,500 crore ($900 million), the indirect tax changes will fetch a net revenue gain of Rs.45,940 crore ($9.1 billion) -- over 10 times more.


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