Play-safe budget, disappoints industry

In a play-safe budget, Finance Minister P Chidamabaram today gave marginal relief to income tax payers and announced some anti-inflationary measures in his fourth budgetary exercise which was received with disappointment by trade and industry.

Personal and corporate income tax rates remained unchanged while the threshold exemption limit has been raised by Rs 10,000 giving a relief of Rs 1,000 to all individuals.

The deduction for medical insurance premium has been hiked to Rs 15,000 and it will be Rs 20,000 for senior citizens.

The new threshold limit in income tax for women will be Rs 1.45 lakh and for senior citizens Rs 1.95 lakh.

However, Chidambaram hiked the education cess from two per cent to three per cent to net an additional Rs 5,000 crore to fund secondary and higher education.

As anti-inflationary measures, Chidambaram announced a ban on futures trading on staples wheat and rice in all commodities exchanges.

He also gave excise duty relief for cement sold in retail at Rs 90 per bag and exempted crude as well as refined edible oils from additional countervailing duty of four per cent to make them affordable.

The duty on sunflower oil, both crude and refined, was reduced by 15 percentage points.

However, for the industry the divident distribution tax has been hiked from 12.5% to 15% while money market mutual funds and liquid mutrual funds will attract 25% dividend distribution tax.

The scope of Fringe Benefit Tax has been expanded to include employees stock option plan (ESOP).

While the jittery stock market tanked 540 points with BSE closing below the 13,000 points level on top of global melt down, corporate leaders were disappointed at not not getting any industry-specific incentives or relief in corporate taxes and surcharge.

By and large, industry and market leaders feel that the budget gave negative sentiment in the short-term but expressed the hope that the economy would emerge stronger in the long run.

"I have not done anything to hurt growth," Chidambaram said at the traditional post-Budget briefing while stressing that a number of measures have been taken to moderate inflation.