Events & Personalities
“A fine balance”
The finance minister has created "a fine balance” between "fiscal consolidation and promoting growth” without resorting to populist measures, said Homi P. Ranina, taxation expert, lawyer and founder trustee of WAPIZ (World Alliance of Parsi Irani Zarthoshtis), while explaining the pros and cons of the Union Budget 2013. He was guest speaker at a meeting of Rotary Club of Bombay Hills South on March 1, 2013 held at the Taj Mahal Hotel and Palace, mentions a write-up on the function sent to Parsiana by Godrej Dotivala, district chairman of the Club. Rotary president Gayomard Panthaki was in the chair and the guest speaker was introduced by Dotivala.
Ranina noted that the investment allowance is a positive provision, as is the proposal to increase the deduction of interest on money borrowed to purchase a residential property sanctioned during 2013-14, provided the loan does not exceed Rs 25 lakhs and the value is not in excess of Rs 40 lakhs. However, the provision that every buyer of property valued at Rs 50 lakhs or more will be required to deduct tax at source at the rate of one percent while paying consideration to the seller, to become applicable from June 1, 2013, would be deleterious, he cautioned.
A measure that will promote investment in the equity market and in mutual funds is the Rajiv Gandhi Equity Savings Scheme for first time investors. This has been liberalized so that investments in listed units of an equity oriented mutual fund would be eligible for deduction up to 50 percent of the amount invested. The maximum amount of investment permitted is Rs 50,000 and the deduction will be available for three consecutive assessment years, provided the gross total income of the taxpayer for the relevant years does not exceed Rs 12 lakhs, Ranina explained.
Those whose income is less than five lakh rupees will receive a tax benefit of Rs 2,000. However, considering the rate of inflation, this will bring little relief, he felt. Meanwhile the surcharge imposed on those earning more than one crore rupees taxable income will have a "very marginal effect” as the increase in tax will amount to just three percent. However, since this burden has been imposed for just one year (so far — editors) in order to bring down the fiscal deficit, the super rich will not mind paying up, he said.
Regarding foreign direct investment, he opined that funds will flow into the country for infrastructure projects only if "there is an expectation of India reaching the growth level of the last five years.” Along with China and Indonesia, India has shown a respectable growth rate exceeding five percent while other countries have experienced a lower growth rate. The finance minister has "tried very hard to ensure that the India growth story is sustainable” so foreign investors would find it a safe bet to invest here.
Ranina noted that the investment allowance is a positive provision, as is the proposal to increase the deduction of interest on money borrowed to purchase a residential property sanctioned during 2013-14, provided the loan does not exceed Rs 25 lakhs and the value is not in excess of Rs 40 lakhs. However, the provision that every buyer of property valued at Rs 50 lakhs or more will be required to deduct tax at source at the rate of one percent while paying consideration to the seller, to become applicable from June 1, 2013, would be deleterious, he cautioned.
A measure that will promote investment in the equity market and in mutual funds is the Rajiv Gandhi Equity Savings Scheme for first time investors. This has been liberalized so that investments in listed units of an equity oriented mutual fund would be eligible for deduction up to 50 percent of the amount invested. The maximum amount of investment permitted is Rs 50,000 and the deduction will be available for three consecutive assessment years, provided the gross total income of the taxpayer for the relevant years does not exceed Rs 12 lakhs, Ranina explained.
Those whose income is less than five lakh rupees will receive a tax benefit of Rs 2,000. However, considering the rate of inflation, this will bring little relief, he felt. Meanwhile the surcharge imposed on those earning more than one crore rupees taxable income will have a "very marginal effect” as the increase in tax will amount to just three percent. However, since this burden has been imposed for just one year (so far — editors) in order to bring down the fiscal deficit, the super rich will not mind paying up, he said.
Regarding foreign direct investment, he opined that funds will flow into the country for infrastructure projects only if "there is an expectation of India reaching the growth level of the last five years.” Along with China and Indonesia, India has shown a respectable growth rate exceeding five percent while other countries have experienced a lower growth rate. The finance minister has "tried very hard to ensure that the India growth story is sustainable” so foreign investors would find it a safe bet to invest here.
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