| Populist & balancing act; no major negatives |
| BS Reporter / Mumbai February 29, 2008 |
| Budget 2008-09 seems to be trying to do a balancing act. While distributing freebies for the rural sector as well as the common man, it has also increased allocations towards social sectors including healthcare and education, contains measures to benefit the elderly, extend a helping hand to sectors that were in trouble (including textiles, auto) and lowered tax outgo for individuals (saving of Rs 44,000 in taxes for a person earning Rs 500,000 a year). All this was largely expected given that 10 state elections and the general election are scheduled over the next 12-15 months. The markets, though, seem to be upset with two things. First, the budget has proposed a hike in short term capital gains tax on securities to 15% from 10%. This would mean a 50% increase in tax outgo with regards to short term gains on sale of shares or mutual fund units. The other proposal pertains to the changes in the treatment of securities transaction tax (STT). However, in this case, marketmen are still not clear and are awaiting clarifications. The other disappointments come in the form of no reduction in corporate tax or dividend distribution tax. A small relief, though, has come in the form of changes in FBT (fringe benefit tax) on certain facilities provided to employees like cr |
