Industry And Individuals To Benefit From Indian Budget

by Lorys Charalambous, Tax-News.com, Cyprus

03 March 2003

Indian Finance Minister, Jaswant Singh's budget on Friday contained measures to benefit both individual and corporate taxpayers, according to reports in the national media.

The Indian Express revealed that a populist budget was expected, due to the fact that a number of state elections are to take place this year. These 'are seen as a dress rehearsal for a national election due by 2004', the newspaper explained.

Among the measures designed to target individual taxpayers in India were: tax breaks on school fees for parents, incentives to provide healthcare cover to the country's poorer citizens, and increased tax exemptions for senior citizens. The Finance Minister also unveiled a new road building initiative, removed capital gains taxes on shares, introduced changes to the taxation of dividends, and promised greater government efficiency in terms of managing the national and state debt.

In the industrial sector, however, reactions to Mr Singh's budget have been mixed. Confederation of Indian Industry (CII) Director, Tarun Das told the Times of India that despite several disappointing ommissions, the budget had actually exceeded his expectations, and explained that the stock market plunge which followed the announcement of the budget was 'essentially a reaction to just a couple of adverse measures', namely the introduction of a surcharge on income tax, and the dividend tax change.

However, Morgan Stanley MD, Ruchir Sharma expressed disappointment, explaining to the Express that the budget 'has not provided for any steps to overcome the impact of the global economic slowdown.'

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