Just say put
Gaurav Mashruwala March 22, 2007
In any case, the budget is not the last word on financial planning. There may be mid-year announcements that would affect your finances more profoundly than the budget proposals.
For taxpayers there is nothing to cheer about or cry foul in this budget. They can continue with their existing financial plans without altering the course. That’s because Finance Minister P. Chidambaram has not made any drastic change in the tax structure. There’s nothing in the budget that should make you worry on any front. Instead focus on your goals and take advantage of the silver linings in the budget.
Hiking the dividend distribution tax (DDT) from 12% (plus surcharge and cess as applicable) to 15% on domestic companies is a dampener. Effectively this means domestic companies will pay 17% to the government before dispatching your dividend. Of course, Chidambaram would still have us believe that dividend income is tax free. The DDT on liquid and money market mutual funds too has been hiked to 25%. The DDT will pull down the yield from these funds and severely impact those who were looking for short-term investing.
There’s some good news in the Budget for senior citizens. At a stage when they need healthcare the most, the increase in the Rs 5,000 deduction under Section 80D and the mandate for publicsector insurance companies to come up with products for them is a healthy prescription. The Finance Minister’s stress on reverse mortgage plans will also ease the liquidity crisis faced by many people in their post-retirement years. They are wealthy but have no money.
The marginal (Rs 10,000) increase in the exemption limit does not significantly change anything for most taxpayers. But raising the education cess to 3% could inflate their expenses. Prima facie, Chidambaram’s Budget 2007 has not done anything spectacular. It can at best be termed ‘neutral’ and at worst be called ‘insipid’.