Budget and The Curious Case of The Salaried Class

I keenly followed the Budget Speech by our Finance Minister Sri Arun Jaitley on Feb 01, 2017 for two things.  Firstly, as an honest tax payer, it is my right to know how the government is spending the money it collected as tax on my income.  Secondly, it is also my right to know what benefits are in store from the Government’s Budget as a citizen, in particular as a middle class tax payer. The Budget is a broader term as far as the Nation is concerned. Expectations from her citizens relatively run high during every budget in a country as large and as diverse as India, which for most of the decades after her independence remained economically oppressed by divisive and dynastic politics.

Since the end of the Budget Day Speech my cell phone is buzzing with WhatsApp forwards and SMSs  most of which were insensible jokes on Budget with insensible numbers and illogical judgements. This has certainly made me dig further about the claims that floating in the social like “Government fools middle class”, “middle class pays tax but gets nothing in the budget”. It is understandable that some sections of the society will never be happy with this budget but seriously it is my own feeling that this is a landmark budget that the Government has ever made.

But then it does not yet answer my two expectations. Let me take a look at the second question first because I belong to that middle class paying tax ‘honestly’.

In a nutshell, the expectations of middle and salaried class from any budget are lesser tax on their income.

Has ‘this Government’ addressed it?

Well, I will not believe in and go by the rhetoric, so I’ll try to consolidate the data points “because that is how salaried class appraisals are also evaluated”. So let us recap and do the due diligence on budgets since 2014. Here is a quick summary before I put the details

Year 2014-15, the first budget of ‘this government’

1. The basic exemption slab raised to 2.5 lakhs. This was 1.8 lakhs up until 2014.
2.  Section 80C limit raised to 1 Lakh. This was 1 Lakh up until 2014.
3.  Home Loan Deduction Limit raised to 2 Lakhs.

Year 2015-16,

1. Additional Deduction of up to 50,000 for investments in NPS schemes. This was 0 up until 2015.
2. Wealth Tax removed. Have you heard any government removing a tax such as this?
3. Medical Insurance Premium deduction raised to 60,000. This was 40,000.
4. The ‘rich’ who earned above 1 Crores had to pay a surcharge of up to 12 %. You see now the rich have to pay more tax (sit tight you are still middle class).

Year 2016-17,

1. Not much was there in this budget for salaried class except that rebate hiked to 5000 for a salaried class earning up to 5 lakhs; which is nothing but the government would pay back in case you have paid more tax.
2. Again the ‘rich’ who earned above 1 Crores had to pay a surcharge of up to 15%. This was 12% previous year. So more tax paid by the ‘rich’ (Remember, you are middle class still).

Year 2017-18,

1. New slabs introduced 5% 20% and 30%. Most of the people who come in the career span of 3-4 years squarely fall in the 5 % bracket.

Year 2018-19,

1.  Standard deduction of 40,000 introduced and no more medical bills to claim medical expenses which many salaried classes claimed with fake bills. No offense to those who produced genuine bills.
2. Education Cess increased from 3 to 4 %. This will be applied on the taxable income after all exemptions and investments.

So when I think of all these budget points for salaried class since 2014, I saved more by investing to avail the budget provisions meant for exemption and paid less in tax. Is it not curious enough to ponder why the salaried class should term this year’s budget as “bad” while enjoying the benefits year over year including this year.  Doing the math should be easy provided now you have all the data points at your disposal. Did you save more money or did you pay more tax?

Now coming to my first expectation, what is the government doing with the money I paid in the form of tax whether it is direct or indirect?

If one hears out the budget in summary, the government has diligently touched upon every section of the society with no trace of appeasement or populism in whatever form unlike yester years regimes. The government has stuck to basics and allocated the money for the betterment of poor and the weaker sections of India which are largely deprived of necessities even as basic as sanitation, education and healthcare. It is both unfortunate and tragic to hear the slogans such as “Gareebi Hatao” and various “Bhagyas” did nothing up until this budget which has attempted to practically address such sloganeering. The National Health Care Scheme is a remarkable announcement for the poor who had little or no access to basic health care.

So the answer to my expectation is that my bucks are safe and they are empowering the poor in terms of their quality of life, education and healthcare.