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Budget 2013: A boon or bane?

Budget 2013 is out! Finance Minister, P. Chitambaram recently announced the new budget aimed at improving country’s GDP which is hitting rock bottom ever since the recession. Touted by many as a balanced and safe budget, let’s speculate if it actually proves to be a boon for the crying economy.

Some of the highlighting feature is the 10% tax rebate over superrich earning over 1 crore p.a. which will surely infuse a large sum for government for carrying out development activities. But does it mean that if a businessman plans to make all his money white and pay all of the taxes, he won't be able to save anything for himself. An anonymous person comments, “This is the reason people do all kind of malpractices and this is the reason most of the big transactions takes place in black money. USA has lot of tax exemption for the corporates generating jobs there. In Singapore the maximum tax slab is not even of 10%. This is the reason they are progressing so faster than us. In late 1990s the mobile tariffs were very high so hardly any operator was able to make money but when calls charges were dropped, number of mobile users rose exponentially. In similar way if government will decrease the tax rates than many more people will try to do transaction in white money any tax collected will be much more than it is now, which will be more beneficial for Indian economy and everyone of us”.

Over the years, budget has very little to offer the IT industry. However this year there are few major announcements which promised to stir some wind in Indian IT industry. Excise duty is planned to increase by 6% on mobiles which means even costlier mobiles than already overprized mobiles. The direct impact will be on small companies like Micromax who may get the benefit of being a less costly brand than premium brands like Samsung, Apple, HTC. From consumer’s front, it will be quite a blow for them.

There are a flurry of proposals to boost local products like indian mobiles and set top boxes. Digitization will force millions of people to buy set top boxes. Cheap indian counterparts may benefit largely from it. The increased excise duty on gadgets is an indirect way of encouraging companies to setup manufacturing facilities in country itself. Those investing 100 crore or more enjoy a deduction of investment amount of 15% over current depreciation rates.

Outsourcing, which plays an important role in economy suffers from vague tax demands. However BPOs will have some respite as PC promised to look into the issue. However most of the problems went unaddressed.

Indian Semi-conductor industry seems to get major benefits as custom duty will be waived off from plant and machinery offering a productive ground for chip makers to set up their base in India. This may in the run of the mill counter the increased taxes on mobiles causing inflation in rates. However, it is far sighted and only time will tell the value of seeds that we sow.

2000 crores have been infused in Science & Technology which will fund all those organizations who work towards providing innovative and fresh concepts and need government’s support to shelve their product commercially. Research will have a major boost which is a positive move and will prove beneficial for India. Same goes for Real time banking solutions. "Post offices will become part of the core banking solution and offer real time banking services. I propose to provide Rs 532 crore for the project in 2013-14," Finance Minister P Chidambaram said.

There were some positive moves and taxes will play an important role in deciding future of the country. However more taxes and already existing inflation will cost a lot of suffering to common man and major industries alike. It will be a hard road from here on for government to face some flakes and fumes by common man.

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