The first budget of the new UPA Government is seen as a roadmap of how it will deliver on the People?s mandate for the next five years. It is a moderate but firm beginning to bring the Economy soon on track before accelerating again to the GDP growth band of 8% - 9% in the coming years, as the Finance Minister firmly put it, The first challenge is to return the GDP growth rate of 9 % pa at the earliest".

The following are some proposals put forward in the Budget speech on Personal Taxation front which seek to simplify the tax administration aspect as well as providing moderate reliefs as could be afforded by the Economy in these difficult times. 

The Income Tax exemption limit has been raised for senior citizens by Rs15,000, for all others by Rs. 10,000. The 10% surcharge on personal income tax removed on taxable income above Rs. 10 lakh. The effect of the above proposals on individuals up to an annual taxable salary of Rs. 10 lakh would be Rs. 1,030. However, this benefit rises to Rs. 37,596 and Rs. 53,046 for an annual taxable salary of Rs. 15 lakh and Rs. 20 lakh, respectively. The Fringe Benefit Tax (FBT) has been abolished. The latter is a welcome step as tax collection entailed a lot of unproductive paperwork. The benefit of the same being passed on to the employees will be a true testimony of the same being beneficial to the taxpayers. 

The Finance Minister gave impetus to vocational courses to be included on par with higher studies when considering eligibility under Section 80-E for Income Tax incentives on educational loans expanded to cover vocational studies after schooling. This does justice to India?s strategic demographic profile. A lot of families could take benefit of this. Many professional courses will now be within the reach of the common man to train their children. This is the need of the hour when millions in India are in need of knowledge based advisory in a lot of services including Investment Advisory. 

To make New Pension Scheme (NPS) more viable from investment perspective, the income of the NPS Trust will be exempted from income tax and any dividend paid to this Trust from Dividend Distribution Tax (DDT). The Securities Transaction Tax (STT) has also been removed on transactions by NPS. However, the step of the Government to retain EET (Exempt - Exempt - Taxed) structure for NPS is perceived to be the likely trend for other investments in future.