It was 12.45 pm. I was reading the Budget document that was presented in Parliament recently. The phone rang. “What’s in the Budget for Seema and me?” It was Atul, a client of mine. It always takes a few days before one fully understands the fine print in the Budget. Fortunately, I had read enough to know the basic amendments.

Atul, 38, has been in the highest tax bracket for a number of years now. With an annual income of Rs 10.5 lakh last year, he is liable to pay income tax of about Rs 2,49,000. This includes the 10 per cent surcharge on income tax applicable to those with income over Rs 10 lakh. In this Budget, the Finance Minister has done away with the surcharge, thereby reducing Atul’s tax liability by about Rs 22,000.

Atul was happy. The Budget has also raised the wealth tax and income tax exemption limits. Atul’s total taxable wealth consists of a second apartment that is lying vacant, his new car and jewellery whose total value stood at Rs 29 lakh last year. As a result, he was liable to pay tax at the rate of 1 per cent for the amount by which his wealth exceeded Rs 15 lakh. So, on Rs 14 lakh Atul had paid wealth tax of Rs 14,000 last year. This Budget has increased the limit from Rs 15 lakh to Rs 30 lakh. This has exempted Atul entirely from paying any wealth tax.

... contd.