Budget was More or Less Fair
Hindustan Times, Jaipur Live, July 13, 2009
By Pradeep S Mehta
Nani Palkhiwala, the famous jurist used to deliver a popular public lecture in Bombay after every budget. Criticising one such budget he termed it as a ‘bureaucrat’s revenge’ as all the new proposals only levied new taxes and introduced complications in rules, rather than simplifying them. The latest budget hopefully is not in the same category but Pranab Mukherjee could have dealt with the onerous tax regime created by P Chidamabaram.
Every budget proposal deals primarily with increasing revenue, rationalising expenditure and increasing public welfare. Within the limited space offered by this column, let us take a swift look at the pluses (good news) and minuses (bad news) of the budget.
- Increase in income tax exemption limit by Rs 10,000: This will imply the easing of individual tax liability by a minimum of Rs 1,030 a year. For senior citizens the minimum benefit will be Rs 1,545 a year. These measures will increase incomes available for consumption expenditure
- Tax exemption for interest payments on all loans for post secondary education as against prevailing exemption only for undergraduate and post graduate courses in engineering, medicine and management, and post graduate courses in applied or pure sciences
- Extension of tax exemption for investments by individuals to cover those under the New Pension Scheme
- Scrapping of fringe benefit tax (FBT) which will ease the administrative burden on companies
- Changes in the indirect tax structure to provide relief to sectors badly affected by the recession such as textiles, automobiles, processed foods, precious metals
- Alignment of tax rates to facilitate the introduction of Goods and Services Tax (GST) which will integrate multiple indirect taxes currently levied on goods and services
- Announcement of efforts to evolve a new Direct Tax Code through a process of consultation with the public
- An ‘Alternative Dispute resolution’ mechanism to bring speedy resolution to tax disputes between the tax payers and the Income Tax Department
- Not everything calls for celebration. Many household items such as manmade fabrics, toothbrushes, contact lenses, LPG stove etc have seen a doubling of excise duty from 4 to 8 percent
- The Finance Minister has ignored the corporate sector demand for a reduction in corporate tax. Renting a house will continue to receive favourable tax treatment relative to owning it.
- A change here could have made a favourable impact on the real estate market. The budget does offer something to every section of society. But fairness does not result in happiness.