Budget evokes mixed reactions

The industry in Nashik seems disappointed over the Union Budget although it has welcomed a few decisions.

Hemant Rathi, president, Maharashtra Chamber of Commerce, Industry & Agriculture (MACCIA), said, "The finance minister has ignored the severe discontent of the business community on fringe benefit tax. The tax continues to exist."

Similarly, the industry had demanded the abolition of Cash Withdrawal Tax, but the minister has chosen to continue with this levy. The threshold limit for individuals and HUFs have been raised from Rs 25,000 to Rs 50,000.

Service Tax rates are not increased and the limits of applicability of Service Tax for small service providers have been increased from Rs 4 lakh to Rs 8 lakh. This is indeed a good decision.

There had been a lot of discussions on withdrawing central sales tax (CST), but the Budget proposes only a reduction in the tax rates from 4 per cent to 3 per cent. The decision to increase the dividend distribution tax rate from 12 per cent to 15 per cent will adversely affect the investment, he said.

"The FM has not made any concrete moves on income tax exemptions, FDI in retail sector, interest on housing loan, conveyance allowance to the employees, depreciation on plant and machinery and big constructions. The inflation is rising at an alarming rate but no specific efforts have been taken to check it. Last year the administrative expenses had been increased by 11 per cent, but the FM seems to have overlooked this issue. When import tax on certain products are reduced, it is also necessary to reduce the excise duty. Otherwise, the finished products of indigenous industries will not be able to face the competition. Import tax on essential commodities is 6.5 per cent and no provisions are made to reduce this," Rathi said.

"The minister does not provide details about how infrastructure projects like roads, power and water management, which have been mentioned in the budget, are going to be implemented. However, a few measures like insurance cover for un-organised labour and farm credit should be welcomed. Excise on cement, coal and metal has been reduced, but the purpose of reducing the excise duty on mouth freshners ike pan masala (excluding tobacco) is not clear. Exempting food processing industries from excise duty and reducing the tax on petroleum products from 8 per cent to 6 per cent are welcome decisions," Rathi said.

Terming it as a faceless budget, Ashok Rajwade, president, Nashik Industries & Manufacturers' Association (NIMA), said, "Increase in dividend distribution tax is not worth. It is an unnecessary burden on the industries paying dividend. Various points suggested for simplification of tax by NIMA and CII are not addressed in the Budget. New scheme to replace DEPB was supposed to be announced. The Budget does not include this initiative, which would have promoted export. It is difficult to achieve the projected GDP growth without solving the issue of power shortage. No special benefit or scheme is given to Maharashtra despite the fact that the state's contribution to the tax revenue is the highest."

"Nevertheless, this budget has some positive sides too. Provisions envisaged for getting employment for physically disabled people and the decision to upgrade ITI are good decisions.

Commenting that it was a dream budget not a cream budget, Digvijay Kapadia, secretary general, All India Federation of Cloth Retailers Associations, president of Nashik Retail Cloth Merchants Association and vice-president of MACCIA, said there was no specific direction given about increasing the productivity of the agriculture sector, which forms 65 per cent of the economy.