budget should provide exclusive Rs 1 lakh deduction for contribution towards insurance premium.
Given the current challenges, what, in your opinion, would make for a good budget? What measures or proposals would you like to see?
The key would be to manage the fiscal deficit by controlling government expenditure. Another important initiative would be to encourage the savings habit by giving independent tax incentives to the general public, to channelise savings into insurance products and towards the infrastructure industry. This would be seen as reformative, encouraging savings while boosting the infrastructure sector. Both these are long-term needs of a growing economy.
Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
A better alternative to begin with would be to not allow any deduction on savings/contributions under chapter VIA (sec 80) to people who have taxable income greater than, say, Rs 50 lakh. As this segment doesn't need tax incentives for savings they can sacrifice the available deductions.
If the budget does not meet expectations, do you fear that business sentiment would once again dip?
If the budget lays down a road-map for reforms, and during the course of the year the government is able to walk the talk, business sentiment will not dip.
Specific to your sector, what could the current budget do to improve conditions?
We hope that additional tax incentives are given by firstly increasing the overall cap on exemption under Section 80CCE from Rs 1 lakh to Rs 3 lakh and by providing exclusive Rs 1 lakh deduction for contribution towards insurance premium.
The direct taxes code proposes to exempt annuities while in the current regime the same is taxable. So, it would be a welcome move to exempt annuities from taxation.