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Budget investor-unfriendly

Nothing much was expected from the Budget by the Capital Market, writes PN Vijay.
None | By PN Vijay
UPDATED ON MAR 02, 2008 09:58 PM IST

Nothing much was expected from the Budget by the Capital Market; not because nothing needed to be done but knowing the predicament of the finance minister one year ahead of the general election, market men had turned cynical.

So, what came out was exactly in line with their expectations – Populist and ‘to be soon forgotten’.

Let us list out some positives:
Firstly, the minimum income tax threshold had been increased to Rs 1.50 lacs with corresponding increase for women and senior citizens.

Old 80 M is being brought back with the setting off of Dividend Distribution Tax for the holding company. The biggest shock to the capital market was the 50 per cent increase in short-term capital gain tax from 10 per cent to 15 per cent.

This went counter to the trend of reductions in the last few years In Indirect taxes, the announcements have been a bit more dramatic, the CENVAT has been reduced from 16 per cent to 14 per cent across the board and this should have a positive impact on inflation and consumption.

The central sales tax has been further reduced and should also have the same effect.

(PN Vijay is an Investment Advisor)

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