Wednesday, March 02, 2005

Taxing Taxes

This year's budget was awaited with 'great expectations' by countless middle class people in India. He did not disappoint us . He has resturctured the existing tax regime. Typically the salaried class will be benefitted by his announcement . The minimum taxable income has become 1 lakh which is good . Standard deductions have been abolished. This might look like a negative announcement . But then the increase minimum taxable in answers it all .

Also , he has made investments cleaner . prior to this we had limits on various schemes.ELSS was capped at 10000 . Section 88 had a limit of 70000. Also these were rebates at the taxable income .

He has removed all caps and made the retail investor choose the investment option on his own . For a young and aggressive investor like me his new announcement has come as a boon. This could increase equity inflow thrugh ELSS schemes . These investments would be treated as dedeuctions rather than the already existing rebates . Meaning every investor would save 15% tax more than what he was doing before on his investments . Most of us should not forget that Pension funds should be in ones portfolio along with other asset classes.

He has introduced tax on cash withdrawals .This he claims would be serving as tax trails. 10000 is too less an amount to have this introduced. Tax for the money we have already been taxed !!!!

By far this budget has come as a relief for the middle class salaried people .

Of Course one would always wish that we had lesser taxesl . That's human attitude .The more you are given the more we want .