Friday, February 29, 2008

Budget India 2008 - Mixed Reactions

The Union Budget for 2008-2009 was announced today by the Finance Mininster Dr. Chindambaram. It is certainly a relief for tax payers as quoted by the Hindu

The Finance Minister has raised the income tax exemption limit from Rs. 1,10,000 to Rs. 1,50,000, thus giving every assessee a relief at minimum of Rs. 4,000. The tax rate will be 10 per cent for the income slab between Rs. 1,50,001 and Rs. 3,00,000 and 20 per cent between Rs. 3,00,001 and Rs. 5,00,000. For income of Rs. 5,00,001 and above the income tax rate will be 30 per cent. The exemption limit for women assessees has been increased to Rs. 1,80,000 and in case of senior citizens to Rs. 2,25,000. The Finance Minister has not proposed any change in corporate income tax and in the rate of surcharge. A person paying medical insurance premium for his parents will be allowed an additional deduction of Rs. 15,000 under Section 80D.
While this is certainly a relief, what the action of bringing
asset management service provided under ULIP, services provided by stock/commodity exchanges and clearing houses, right to use goods in cases where VAT is not payable, and customized software under Services Tax is to be seen. This would be significant because, people tend to invest mostly in mutual funds and stocks to avail tax exemption through investment.

Rs. 60,000 crore debt relief package for farmers is a cause of concern only spreads worry and dissent. Don't get me wrong. I do understand that farmers need help direly. What I do see is that every government tends to give debt waivers at every instant possible. This actually creates a mindset that farmers need not pay nationalized banks debts as they will be waivered anyway. What is required is that farmers are able to better utilize their resources, availability of better tools for their job, proper irrigation is available, land fertility is maintained and they have all the basic necessities and facilities like schools, clean drinking water, health care. We are yet to see these reach the farmers. What progress and awareness we see among them are rarely government's efforts but are works of some dedicated individuals, NGOs or the urban progress slowly percolating to their level. But real progress is yet to reach the grass-root levels. All the development works planned by the government are sucked dry before they reach the target audience. Only when the corruption in the system is uprooted and accountability and self-discipline sets in, will we truly see 'India Shining'.