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Manufacturing Boosted, Salaried Busted

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DQC Bureau
New Update

By proposing a duty reduction in capital goods from 25 percent

to 15 percent, Finance Minister Yashwant Sinha, has given a boost to

manufacturing in the country. IT manufacturers should be pleased with this

development since it rectifies the inverted tariff structure that was prevalent

so far.

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The other measure that should improve the confidence of

manufacturers is the postponement of the implementation of WTO agreement to 2005

instead of 2003. The IT sector being the only one to face zero duty regime,

required sufficient time to upscale itself to face the new situation.

In the software sector, though the 10 percent tax on software

export earnings has come as a dampener, the FM says that the measure is meant

for only 2002-03 to ensure everybody contributes towards national security. The

increase in the foreign firm acquisition limit to $ 100 million through the

automatic route, has opened the door for Indian software companies to go

international.

When it comes to budgetary measures for the salaried, the FM has

almost busted this class of taxpayers! With the Sec 88 deduction reduced to nil

for those who earn above Rs 5 lakh and only 10 percent for those who earn

between Rs 1.5 Lakh to Rs 5 lakh, the FM has removed any incentive left for

saving.

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Several perks of the salaried individuals was already within the

tax dragnet since last year. For instance, leave travel allowance was not

taxable if bills were provided for the expenses. Now, only the travel expenses

remain non-taxable. Therefore this class of population has to work four months

of the year for the benefit of the government and rest of the time to sustain

itself!

The Finance Minister should not get wrong the angry sentiments

of the salaried. This class indeed wants to pay taxes. It realizes fully well

that those who earn more need to contribute more to the security and the upkeep

of the nation. But how much more should the salaried pay?

And after paying almost four month’s salary as tax, what does

the salaried class get in return from the government? Very little indeed. To get

a passport, it takes more than three months. The project of supplying photo

identity cards to voters was taken up several years ago and yet remains

incomplete.

The roads of the nation are in pathetic condition. Yes, the

budget has recognized the bad state of roads and has provided for some funds.

But this is too little coming too late. Also, whenever new roads and bridges are

built, toll is charged as a routine. So where does the tax money get utilized?

What the government should do is stop squeezing the salaried

more and take drastic and innovative measures to ensure that greater number of

people pay taxes. Why target only this class and let 98 percent of the

population go tax-free?

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