Thursday, February 28, 2013

For the taxpayers, the Union Budget provided little relief. Given the need to bring down the fiscal deficit, the Finance Minister (FM) threw his hands up saying that there was very little room to provide tax benefits. As such he decided to leave the income tax slabs and rates unchanged. This would give a sigh of relief to those who were expecting an increase. Given the fiscal deficit problem, that is what everyone expected. There was some relief to the first time home buyers in the form of additional deduction.

But the part of the community that will not be rejoicing this year's budget would be the 'super rich' community. People with taxable incomes of over Rs 10 m would have to pay an additional surcharge of 10%. This is akin to what has been done in US as well. Though the idea behind the tax on super rich is good we believe this is not something that can help our fiscal deficit problem. All it does is give more money to the government who till now has not proved to be a very prudential spender. And we are afraid that the government will just find new ways and means to squander away the extra money. Hopefully the government will prove us wrong. But given the increased expenditure proposed in the Budget, we don't think we will be.