The Hindu Business Line : Sighs of relief and dropped jaws — The FM seems content more at not ruffling many feathers

Tasks left incomplete
Tax evaders' citadels not touched.
Studied silence on exempt-exempt-tax.
Disappointment over standard deduction not staging a comeback.

The Budget would perhaps be remembered for a long time not for being a path-breaking one but for not ruffling many feathers. And this is at once a reason for both rejoicing and mourning.

Taxpayers, hitherto accustomed to viewing the Budget as an exercise in chronic tinkering, would be happy that they have been left alone and, more importantly, spared from the agony of the much-feared EET (exempt-exempt-tax) regime that was doing the rounds in the run-up to the Budget.

The salaried class, of course, is disappointed that standard deduction has not staged a comeback. Tax evaders, whose citadels have not been touched, must be laughing up their sleeves yet again. Apart from the proposal to bring anonymous donation received by charitable trusts into the tax net, the Budget unfortunately contains no new proposal to carry the war into the tax-evaders' camp. This is bound to be bemoaned by all those who were rooting for widening of the tax net by improving and fine-tuning the existing presumptive tax schemes as well as by new measures.

The abolition of the economic criteria scheme for compulsory filing of income-tax return is a belated, if tacit, admission of the fact that the scheme has not served the purpose — to widen the tax net — for which it was designed. The fault of course lies not with the scheme but with its follow-up or the lack of it. No serious attempt it seems was ever made to follow-up such returns with notices, albeit random, to ferret out the undisclosed incomes.

One wishes that the Finance Minister had also done away with the need for filing return by those having only salary as their income given the fact that the return filed by the employer at the end of the year, for tax deducted from salary practically gives all the details relating to employees' salary income from which tax has already been deducted. Such returns only serve to choke the departmental machinery whose precious time could be put to more productive use like scrutinising the returns filed by businessmen.

The personal and corporate rates have not been disturbed. The increase in service tax rate from 10 per cent to 12 per cent, of course, would add to the expenses of householders and housewives besides those in business.

That the Finance Minister was in no mood to antagonise the Left is evident from is studied silence on EET regime as well as from his proposal to step up the Securities Transaction Tax (STT) across the board by 25 per cent. But then this increase would at the end of the day be a mere tokenism given the fact that STT is a soft impost.

In fact there is considerable merit in the contention that STT should be in addition to, and not in substitution of, capital gains tax. Long-term capital gains continue to be pampered. The tax shelters have not been dismantled, as recommended by the Kelkar Committee.

The silence on EET seems to be like the proverbial lull before the storm.

After all, the proposal has not been dismissed out of hand. May be, the FM is waiting for a more propitious time to usher it in.

The FM's priority should be to go after the hard-to-tax category instead of wasting his amenities on the honest taxpayers whose small party he should not spoil now or ever.

(The author is a Delhi-based chartered accountant.)