Sunday, March 18, 2012
Pranab Da – You Made Our Lives A Lot More Taxing
We saw it coming. Didn’t we? In a blog of mine (on the day of your previous budget) last year I had raised my concerns that your promise to kick start the Direct Tax Code from 2012-13 session would fall flat as bigger scams would be unearthed and better rascals be apprehended resulting into huge losses for the exchequer. As usual the citizenry would be forced to pay from their nose to balance out the loot money so that the government machinery can keep running. And that’s exactly what happened and that’s exactly what you handed over to us – absolute no relief for the common mass who are reeling under inflation, massive corruption, democratic instability, tantrums from your party men, pathetic performance of our Cricket team and what not.
In the new proposed tax slab of yours you might have gifted us Rs 4500 crore relief but you conveniently took away Rs 41440 crore in the form of indirect taxes at the same time. That’s so brilliant a trick Pranab Da. While all were expecting the nontaxable limit to be increased to at least 3 lakhs you instead thought of making a mockery of our expectations by increasing it by a meager 20000 to 2 Lakhs. That is a great relief of Rs 2000 Pranab Da. In exchange let’s see how much we have to shed away from our hard earned money. You seem to have taxed every damn service under the sun. From eating out in eateries to mobile bills, watching a movie and A/C rail travel (hope Mamta Didi is watching); you have increased the price of it by increasing the service tax from 10.3% to 12.36%. If that was not enough you made sure my next experience in a supermarket becomes more painful (a nagging wife alongside was not sufficient enough I guess) you increased the excise duty from 5.15% to 6.18% and 1.03% to 2.06%. That is roughly an average of 8% hike in everything that I purchase. Another jolt that you inflected on average middle class is on their dream to own a car. The 27% increase in excise on cars over 1500 CC is not only stiff but also a platform for shattering dreams as there are very few cars (which could be called descent) are available in Indian market that can fall below this hike threshold. That is roughly a 20% hike on car prices. And please don’t argue that you balanced the blood sucking when you increased the baggage allowances at the airport from Rs 10000 to Rs 35000. In a country where 40% people don’t get a square meal per day to eat, how many would benefit from this free baggage hike is anybody’s guess.
So here is the thing – those who are in the salary bracket between 8 to 10 lakhs can save anywhere between Rs 2060 to Rs 22660, depending on the amount they get while they would be giving away anywhere between Rs 3200 to Rs 30000 on the basis of the new increased indirect consumer taxes. And those who (people like me) are in the 30% tax bracket gain almost nothing. Ironically if someone gets Rs 83000 as a monthly salary, you find him no different from Mukesh Ambani (as far as taxation is concerned) who takes home Rs 1.25 crore per month. Should we cherish this moment for being treated special and at par with the richest Indian in the world? Now you also increased the nontaxable interest amount to 10000 in the savings bank account. That in a way suggests if you are in the 30% bracket then it makes more sense to deposit 1.4 Lakhs in the Savings Bank earning a 7% interest than putting it in a fix deposit which is taxable. I don’t see logic in this kind of reform. I am no economist but I don’t see how money in the normal Savings Bank account going to help the banks who are under tremendous global monetary pressure. Add to that the behavior of RBI in slashing or increasing the Repro rate in every fortnight might not please the bankers around India. That is rubbish; as I being a layman in Economics can still stick my neck out and say. And what about the inflation? When RBI is on the heels of the banks you senselessly increased the service and excise duty. That’s for sure going to give a tough time to average middleclass consumers of India.
You even shattered the dreams of the middleclass who slog throughout their lives to build their own home. Land value above 50 lakhs in urban and 15 lakhs in rural areas invites 1% of the registered amount be deducted at source as tax. That is Rs 50000 right there for individuals to cough out. At this juncture it would be mighty helpful to let us know where in earth (looking at the surging real estate) one can find a piece of land of descent size below 50 lakhs. Not at least in tire-I or tire-ii cities. Unless one plans to settle around the villages of India he or she must put his or her real estate dream in the backseat for the time being. Rubbish again; can I say?
Look at what you have done to the investors. In conservative estimate the investors are going to lose roughly 90K crore this year; thanks to your new policies. You have imposed TDS everywhere. From jewelry purchase above 2 Lakhs to debentures gained above Rs 5000. In Indian culture and the rocketing price of gold, just imagine what an average father of the bride had to shed off to get her daughter married. And please don’t tell me, it is an indirect effort of yours’ to curb the menace called dowry in India. You also reduced the tax benefit from 20% to 10% on the annual premium (of the sum assured) of life insurance. Ridiculous. Isn’t it? No wonder insurance companies are fuming like pregnant cobras.
In nutshell, you made our lives more miserable Pranab Da. No relief whatsoever for the middle class and can be said, this budget has got absolutely nothing for the people who were most deserving to get some kind of relief. We were sucked out of our hard earned money yet again while you weight people like Vijay Mallya and their plight over national outcry and suffering. One billion (in USD not Rupee) of our money is unceremoniously pumped into aviation sector to give the incompetent individuals a relief while the middle class are wiped out of any avenue of savings. Money is kept on pumped into non-performing social reforms like NREGA and elsewhere so that looters have a great feast yet again throughout the year. Hundreds of crores were issued to various institutions for no apparent reason while our health and education sectors remain dry. No considerable increase in our defense budget either.
All-in-all, I am not sure how much I should give this budget out of 10. Perhaps 4 at the best. But one thing is clear Pranab Da – you disappointed yet again; as usual. Sigh!!