'Why should taxes be tampered with every year?'

Arvind Jolly

This Budget has hit the income group above Rs 500,000 below their belt. That is really sad.

There is a surcharge of 5 per cent on incomes above Rs 60,000 and exemption available on Sec 88 has been reduced from 20 per cent to 10 per cent.

There has also been a reduction in custom duties. Peak duties have been reduced from 35 per cent to 30 per cent. On many items especially on steel raw materials, concessions on import duty has been given. Revenue from imports for the govt will go down by Rs.2000 crores.

I understand from the FM speech that the import duty on computer hardware has been reduced to 5 per cent.

I hope our thoughts reach the politicians. They are listening to us but due to their own compulsions of having coalition partners, strong opposition and a bureaucracy that spends too much money they are not able to make the right decisions.

The Budget affects the salaried class. Firstly the increase in surcharge of income tax, then the withdrawal of Sec 88 exemption. Indirectly, he will have to pay more for kerosene, LPG and railway tickets.

There is too much hype about the budget. I don't understand why taxes should be tampered with every year. Let there be a three year policy. I am certain that Mr Sinha cares about the common man, after all his votes come from the common man.

I think the salaried person is caught. But if you view it from a 10 year perspective the income tax rates were being lowered every year. Now that the govt cannot make two ends meet they have increased the income tax rates and withdrawn some exemptions.

Petroleum prices were always regulated and controlled by the government under the system called Administered Price Mechanism. Now APM is being dismantled. Prices of petroleum products will be based on the manufacturing cost. Hence LPG and kerosene becomes more expensive because these were subsidised and on the other hand petrol becomes cheaper.

Interest rates on FD are rates regulated by the RBI and the individual banks. The trend is that the rates will come down. Even on housing loans you will get the benefit of lower rates as every bank wants to enter the housing loans business.

Section 88 covers rebate on income when you invest in PPF, LIC, NSC etc. This relief was available for 20 per cent of tax payable, now it is available for only 10 per cent. In short, your exemptions have been reduced and you pay more taxes.

There are some benefits for the hotel industry. The expenditure tax will be payable only on the room rates. Also expenditure tax will be payable only on hotels charging above Rs 3000 (previously Rs 2000).

Arvind Jolly is president, Indian Merchants Chamber.

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