The Union Budget of 2006 has been a mix of highs and lows. When Chidambram quoted Charles Dickens' - 'the best of times and the worst of times' for the time the country is going through, he also set the stage of the upcoming budget too. In this small review, I present the budget from my perspective - proposals that would affect me personally. As a typified professional working in a large corporation, this probably would be how many of my colleagues would be affected too.
First the highs - the country is doing well with a GDP of 8%+. Completion of 96% of the Golden Quadrilateral would give the required shot in the arm to the ailing infrastructure. Manufacturing sector shows signs of recovery at 9.4%. Some semblance is likely for the residents of Bangalore as the metro rail project gets a nod. To ensure that the stock markets keep chugging at their current pace, FII investments have been increased from $1.75B to $2B. VAT has been a success in the previous year and will now be implemented in other states too. And goods are likely to get cheaper due to reduction in customs, import and excise duties for a broad spectrum of products.
For the salaried class, the 1/6 rule for filing taxes has been abolished. The tax rates will remain the same. In this I feel PC has taken the 'why fix something that's nor broken' approach. There's one important proposal in this budget that's likely to pinch all our pockets - service tax has been hiked from 10% to 12%. Since this tax applies to a wide variety of services, most of us will be directly affected. The finance minister has indicated his proclivity for savings - he's exempted long term FD from income tax.
In my personal opinion, this budget is likely to increase the cost of services but decrease the cost of goods. I hope the service tax increase and the VAT/duty combination balance each other out. We shall see the effects of this budget unfolding in the coming months.
hey Chidambram has decided to play safe thats y he has done only some deplomatic changes