Budget disappoints industry - Gujarat Chamber of Commerce & Industry

01 Mar '07

3 min read

In regard to the direct tax proposal increasing the threshold limit on personal income tax by Rs.10,000 is a pittance and would be neutralized through levy of 1% additional education cess. It is positive that there is an increase in the medical insurance premium limit for Rs.10,000 to 15,000 and removal of surcharge on IT for small and medium enterprises. GCCI has regretted imposition of minimum alternate tax [MAT] under section 10[A] and section 10[B] as this would adversely affect export oriented unit since it would reduce the export competitiveness.

It is deplorable that instead of abolishing the dividend distribution tax as demand by GCCI the same has been increased 12.5% to 15%. Similarly instead of making fringe benefit tax [FBT] more reasonable the budget proposes levy of FBT on ESOP which would hamper employer-employee relation ships.

Core areas emphasized in this year's budget namely higher investments in health and education, agriculture, and extension of employment guarantee schemes are welcome.

In the long run skill shortage for human resources has been described as one of the obstacles for growth of India's knowledge economy and investments are a must to achieve high growth rates. Strengthening the social infrastructure through increased allocations would surely go a long way.

Despite the increased allocations in the various schemes, which at one stage is positive what needs to be ensured is the effectiveness and efficiency of the delivery systems. Resources are never a problem vis-à-vis the social sectors, it is the way it is spent. What we require is administrative reforms to improve delivery mechanisms and make them more accountable.

Gujarat Chamber of Commerce and Industry

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