Finance Minister Jaswant Singh has made a slew of people-friendly announcements in the Budget 2003-04, though he did not tinker with the Income Tax rates for both individuals and corporates.
Against expectations, Singh did not raise the Income Tax exemption limit and retained it at Rs 50,000, though he removed the five per cent surcharge for individual Income Tax payers. The maximum marginal rate of tax applicable to individuals in respect of taxable income of over Rs 1,50,000 is 30 per cent. In respect of taxable income of over Rs 8.5 lakh, a surcharge at the rate of 10 per cent is payable.
In respect of corporate assessees the tax rate stands at 35 per cent. Budget 2003 has reduced the surcharge in respect of corporate assessees-firms, cooperative societies and so on-from 5 per cent to 2.5 per cent. The National Task Force headed by Vijay Kelkar had recommended that the minimum alternate tax (MAT) at the rate of 7.5 per cent of the book profit should be abolished. But the finance minister has chosen to continue with mat.
Budget 2003 has exempted dividend income in the hands of shareholders. But firms have to pay a 12.5 per cent corporate dividend distribution tax. Thus, the earlier system of exempting dividend income in the hands of the shareholders and taxing the same in the hands of the company has been restored. Instead of 10 per cent, though, it has now been increased to 12.5 per cent.

The Income-Tax Act duly takes into account the needs of the common man. Firstly, there is a non-taxable ceiling limit of Rs 50,000. Secondly, standard deduction is permissible in respect of salaried assessees. Thirdly, medical reimbursement is available in respect of expenditure incurred. Apart from this, Budget 2003 has proposed to allow a rebate under Section 88 in respect of educational expenses up to Rs 12,000 per child for two children. The overall qualifying amount eligible for rebate is Rs 70,000 excluding infrastructure bonds.

For senior citizens and pensioners, the Budget has made some important announcements, while making the filing of Income Tax returns easy too. Senior citizens who are 65 years and above enjoy a tax rebate under Section 88B. Budget 2003 has increased this rebate from Rs 15,000 to Rs 20,000. Thus, a senior citizen earning an income of Rs 1,53,000 need not pay tax. Additionally, self declaration of tax returns from them will also be accepted.
Life Insurance Corporation (LIC) will launch a pension fund product, Varisht Bima Yojana, for senior citizens above the age of 55 years. The scheme will carry an attractive nine per cent interest rate.

Taxable Income	Tax
Upto Rs 50,000	Nil
Rs 50,000 to Rs 60,000	10% of income above Rs 50,000
Rs 60,001 to Rs 1,50,000	Rs.1,000 plus 20% of income above Rs.60,000
Rs 1,50,001 and above	Rs.19,000 plus 30% of income above Rs.1,50,000

Taxable Income (Rs)	Tax liability forgeneral citizens
	Income tax(Rs)	Surch-arge (Rs)	Total Tax(Rs)
40,000 Nil Nil	Nil	Nil	Nil
50,000	Nil	Nil	Nil
55,000	500	Nil	500
60,000	1,000	Nil	1,000
75,000	4,000	Nil	4,000
1,00,000	9,000	Nil	9,000
1,50,000	19,000	Nil	19,000
2 lakh	34,000	Nil	34,000
3 lakh	64,000	Nil	64,000
5 lakh	1,24,000	Nil	1,24,000

Income Group < Rs 1,50,000
Particulars	Pre Budget Amount (Rs.)	Post Budget Amount (Rs.)
Annual Income from Salary	135,000	135,000
Less: Standard Deduction	(30,000)	(30,000)
Taxable Income From Salaries	105,000	105,000
Deduction u/s 80 (assumed)
Mediclaim - u/s 80D	(8,000)	(8,000)
Pension Plan - u/s 80CCC(I)	(6,500)	(6,500)
Interest - u/s 80L	(3,500)	(3,500)
Taxable Income	87,000	87,000
Tax on the above	6,400	6,400
Rebate u/s 88 (assumed)
LIC - Rs 5,000	(1,000)	(1,000)
PPF - Rs 4,000	(800)	(800)
Education - Rs 6,000	0	(1,200)
Total Rebate	(1,800)	(3,000)
Tax	4,600	3,400
Surcharge	230	0
Total Tax Liability	4,830	3,400
Reduction in Liability		1,430
Income Group > Rs 5,00,000
Particulars	Pre Budget Amount (Rs.)	Post Budget Amount (Rs.)
Annual Income from Salary	5,50,000	5,50,000
Less: Standard Deduction	0	(20,000)
Taxable Income From Salaries	550,000	530,000
Deduction u/s 80 (assumed)
Mediclaim - u/s 80D	(8,000)	(8,000)
Pension Plan - u/s 80CCC(I)	(9,000)	(9,000)
Interest - u/s 80L	(6,000)	(6,000)
Taxable Income	527,000	507,000
Tax on the above	132,100	126,100
Rebate u/s 88 (assumed)
LIC - Rs 5,000	NIL	NIL
PPF - Rs 4,000	NIL	NIL
Education - Rs 12,000	NIL	NIL
Total Rebate	NIL	NIL
Tax	132,100	126,100
Surcharge	6,605	0
Total Tax Liability	138,705	126,100
Reduction in Liability		12,605
Earning Section: Employed
Particulars	Pre Budget Amount (Rs.)	Post Budget Amount (Rs.)
Annual Income from Salary	1,000,000	1,000,000
Less: Standard Deduction	0	(20,000)
Taxable Income From Salaries	1,000,000	980,000
Deduction u/s 80 (assumed)
Mediclaim - u/s 80D	(10,000)	(10,000)
Pension Plan - u/s 80CCC(I)	(10,000)	(10,000)
Interest - u/s 80L	(12,000)	(12,000)
Taxable Income	968,000	948,000
Tax on the above	264,400	258,400
Rebate u/s 88 (assumed)
LIC - Rs 5,000	NIL	NIL
PPF - Rs 4,000	NIL	NIL
Education - Rs 12,000	NIL	NIL
Total Rebate	NIL	NIL
Tax	264,400	258,400
Surcharge	13,220	25,840
Total Tax Liability	277,620	284,240
Reduction in Liability		6,620
Particulars	Pre Budget Amount (Rs.)	Post Budget Amount (Rs.)
Annual Income from Salary	200,000	200,000
Less: Standard Deduction	(25,000)	(30,000)
Taxable Income From Salaries	175,000	170,000
Deduction u/s 80 (assumed)
Mediclaim - u/s 80D	(2,500)	(2,500)
Pension Plan - u/s 80CCC(I)	0	0
Interest - u/s 80L	(12,000)	(12,000)
Taxable Income	160,500	155,500
Tax on the above	22,150	20,650
Rebate u/s 88 (assumed)
LIC - Rs 5,000	(750)	(750)
PPF - Rs 4,000	(600)	(600)
Education - Rs 12,000	(1,350)	(1,350)
Total Rebate	(15,000)	(20,000)
Tax	5,800	NIL
Surcharge	290	0
Total Tax Liability	6,090	NIL
Reduction in Liability		6,090