STT reduction is a welcome move: Keki Mistry

It is always a challenge to balance tax sops, boost investments and allocate resources towards social programmes. The markets appear to be overacting and in my view, there is no rationale for such negativity.

The investment allowance for manufacturing companies would encourage asset creation. The other welcome measure is the enhancement of interest deduction on home loans. Housing is a key growth driver of the economy and hence allowing an additional deduction of Rs 100,000 for an individual taking a loan up to Rs 25 lakh for his first home is a welcome move for the sector. This sector is the second largest employment generator in India and has strong and backward linkages to over 276 industries.

Given the fiscal constraints, the Budget did not introduce incentives to increase financial savings, which have been declining in the recent years. Financial savings, which accounted for 47 per cent of the household savings in 2000-10 decade, have fallen to 36 per cent in FY 2012. Positively, the reduction of the Securities Transaction Tax could be a key driver in incentivising investments in the financial market.

Although imposing a 10 per cent surcharge on individuals that have a taxable income exceeding Rs 1 crore is a necessary step at this point of time, one would have liked to see more measures to widen the tax base.

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Keki Mistry,
Vice-chairman & CEO, HDFC