The Union Budget presented by the Finance Minister yesterday was one which aimed at doing "No harm"rather than "doing good" to the economy on the whole. There were no major big bang reform measures announced. Even the much anticipated and "taken for granted reform" of increasing the FDI limit in insurance sector didn't come through. Mr. Minister shied away from giving a target for disinvestment as well. This sent the capital markets into a tail spin. The FBT was removed which is a positive for the corporate sector , but, the MAT was increased to 15% taking away the sheen of FBT removal.
As far as common man and his income tax is concerned, there was not much for him. The new budget proposes to increase the tax free income limit by Rs 10000 for women and men and Rs 15000 for senior citizens. So now the new tax free income slab would be
Men- Rs 1.6 lakhs
Women- Rs 1.9 Lakhs
Senior Citizens (including women) - Rs 2.4 Lakhs
The actual saving in terms of tax outflow would be as follows
Men - Rs 1030
Women - Rs 1030
Senior Citizen - Rs 1500
The tax surcharge of 10% for people with annual income of over Rs 10 lakhs pa also has been withdrawn. This is a positive step for HNIs in the country. They will save some money since the effective top tax bracket will now be at 30.99% rather than 33.99% as was earlier.
The major disappointments from Income tax perspective were
1. No increase in the exemption limit under Sec 80C.
2. No increase in exemption limit for repayment of Housing loan interest and principal component.
3. NPS still under EET rather than much need EEE tax regime.
4. No increase in the exemption for medical expenses and medical insurance limit.
5. Non inclusion of tuition fees in the Sec 80C.
The major disappointments for Corporates were as under:-
1. Increase in MAT by 5 %.
2. No major policy reforms announced.
3. Increased govt borrowing likely to push up the interest rates further slowing down growth.
4. STT not removed.
5. No road map laid out for bringing down fiscal deficit . This may affect India's sovereign rating making fund raising even more costly.
The things which corporates liked in this budget :
1. Removal of FBT.
2. Increased push on infrastructure and social spending.
3. No rollback in the stimulus provided last year.
4. Increase in STPI by another year.
5. CTT removed.
Hopefully, in the next budget, MR Finance Minister will be able to meet some of the expectations of both corporates and the common man which he could not this time. This is India's time in the sun and we need MR. Finance Minister's help to siege this opportunity. Hope Mr Minister is listening.