PC takes reforms wheel
Like previous years, the Budget is firmly on course for the objectives it has set for tax and socio-economic reforms, which went a long way in improving the tax/GDP ratio to 12.5% from 9.2% in four years.
| Gaurang Shah MD, Kotak Mahindra Life Insurance |
Like previous years, the Budget is firmly on course for the objectives it has set for tax and socio-economic reforms, which went a long way in improving the tax/GDP ratio to 12.5% from 9.2% in four years.
The proposal to bring AMCs of Ulips under the service tax net recognises the fact of convergence in offering savings products by insurance companies, mutual funds and maybe, the pension sector in future.
True, it will raise costs marginally, but these will be absorbed. The increase of Rs 15,000 in the Section 80 (d) limit to include medical premium paid for one's parents will boost the health product offering.
The major gain for the industry though will flow out of the increase in exemption limits and increasing the tax slabs, handing every tax payer handsome savings.
Unfortunately, the stock market has reacted negatively to the Budget as it is unclear, until now, where the funds to waive the Rs 60,000 crore worth of agricultural loans will come from.
It appears that the market may have assumed that the responsibility of this waiver will fall on the banking sector.
Other proposals which may seem negative for the market at first look like the hike in short-term capital gains will be accepted without much ado by market players.
The immediate reaction of the market is partly a reflection of its disappointment that its expectations were not fulfiled regarding a cut in corporate tax.
The Budget, in my view, is neutral to positive for the stock market. In the short run, it is going to behave more in line with the global cues and investment of FIIs in our market.
The proposal to bring AMCs of Ulips under the service tax net recognises the fact of convergence in offering savings products by insurance companies, mutual funds and maybe, the pension sector in future.
True, it will raise costs marginally, but these will be absorbed. The increase of Rs 15,000 in the Section 80 (d) limit to include medical premium paid for one's parents will boost the health product offering.
The major gain for the industry though will flow out of the increase in exemption limits and increasing the tax slabs, handing every tax payer handsome savings.
Unfortunately, the stock market has reacted negatively to the Budget as it is unclear, until now, where the funds to waive the Rs 60,000 crore worth of agricultural loans will come from.
It appears that the market may have assumed that the responsibility of this waiver will fall on the banking sector.
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Other proposals which may seem negative for the market at first look like the hike in short-term capital gains will be accepted without much ado by market players.
The immediate reaction of the market is partly a reflection of its disappointment that its expectations were not fulfiled regarding a cut in corporate tax.
The Budget, in my view, is neutral to positive for the stock market. In the short run, it is going to behave more in line with the global cues and investment of FIIs in our market.
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