It is a mixed bag. The Union Budget 2007-08 announced by Finance Minister P Chidambaram that is.

It is a mixed bag for the salaried and the investing class. Both have got some bouquets and brickbats. That's the first impression at least.

More will follow when experts scan through reams of newsprint on the budget proposals and analyse every word including the fine print.

Till then let's look at what the first impression looks like. There's not much that the finance minister did for the salaried class as far as personal income tax is concerned.

Some good news first

Policy announcement: Increase in the basic exemption limit for men and women on their salaries by Rs 10,000.

Impact: If you belong to the male fraternity and earn less than or equal to Rs 1,10,000 than you will not have to pay a single penny as income tax.

This limit earlier was only up to or less than Rs 1,00,000 for men.

However, salaries above this fixed ceiling will have to pay tax.

• Budget 2007-08: Complete Coverage

Women, too have got an increase of Rs 10,000 in the basic exemption limit on their salary.

This section of taxpayers will not pay any income tax for salaries earned up to Rs 1,45,000 now compared to Rs 1,35,000 earlier.

Because of this provision any taxpayer earning more than the limits described above will have Rs 1,000 more as disposable income than the last year.

Now let's look at the negative. Though not negative in the strictest terms it may seem to have fallen short of individual taxpayers' expectations.

What's given needs to be taken back. That's what experts believe was the finance minister's motto in this budget.

There will be an additional tax on the income tax you pay. This additional tax is known as 'cess' and it's increased to 3 per cent from the earlier 2 per cent.

By the way, this extra cess collected goes towards improving 'Secondary and Higher Secondary Education'.

The total tax outgo now and then

This is how it works.

Assume you have a gross income of Rs 250,000. Deducting the exemption limit of Rs 110,000 announced in this budget for males, your total taxable income works out to Rs 140,000.

Taxable income = Gross salary � Basic tax exemption limit.

Now let's assume that you pay a 4 per cent income tax on this taxable income. This works out to Rs 5,600 annually (4/100 * Rs 140,000).

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On this 4 per cent (Rs 5,600) now you will have to pay a cess of 3 per cent. That results in an extra outgo of Rs 168 (3/100 * Rs 5,600).

Taking both the 4 per cent income tax and 3 per cent cess on this 4 per cent your total outflow will now be Rs 5,768.

Let's see how much did you pay last year for the same amount of gross salary.

As per the last year's budget your total basic exemption limit was Rs 100,000. Hence your total taxable income then was Rs 150,000.

On this you paid an income tax of 4 per cent, which works out to Rs 6,000. The cess last year was only 2 per cent and not 3 per cent. So the cess amount works out to Rs 120 (2/100 * Rs 6,000).

The total tax outgo including both the income tax and the cess on that income tax then added upto Rs 6,120.

The final outcome

Those belonging to this particular class of salaried tax payers (males with gross income of Rs 250,000) will be happy because the total tax outgo is less now (Rs 5,768), then it was last year (Rs 6,120).

The total amount saved per annum will be Rs 352.

Nothing much for high-income earners

The equation doesn't change much even when your gross salary per annum exceeds Rs 550,000 as they pay a higher tax on their taxable income.

The income tax rates in this case vary from 18 per cent to 27 per cent.

Let's assume that you are a female and your gross salary per annum is Rs 750,000.

In this case your taxable income will be Rs 605,000 (Rs 750,000 less Rs 145,000). On this suppose you pay an income tax of 18 per cent, then your taxable income sums up to Rs 108,900 (18/100 * Rs 605,000).

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On this you have to pay 3 per cent education cess. That is Rs 3,267 (3/100 * 108,900). The total tax outgo this year including the income tax and cess works out to Rs 112,167.

How much would you have paid last year?

Well, let's calculate this as well.

The basic exemption limit on gross salary last year was Rs 135,000 and education cess was 2 per cent of the income tax.

So the total taxable income in this case becomes Rs 615,000. With 18 per cent tax the total income tax outgo on this amount would have been Rs 110,700 (18/100 * Rs 615,000) last year.

A 2 per cent cess on this amount would have taken away another Rs 2214 (2/100 * Rs 110,700) and the total tax outgo to Rs 112,914.

Nothing much gained

In this case the total tax saved this year compared to last year will be Rs 747 (Rs 112,914 � Rs 112,167). Nothing much gained here as well.

These figures does prove that the finance minister could have done more for individual taxpayers had he not increased the cess from 2 per cent to three per cent.