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What is your opinion about Budget 2005-06?
Under the circumstances, given the pulls and pressures of the UPA Government, the finance minister has come up with, what appears to be a very good budget. It is progressive, it seeks to simplify the tax regime, seems to encourage investments, and therefore on balance, it appears to be quite good.
However the challenge the FM would have to deal with would be in terms of the fiscal deficit that this budget is looking to generate which is almost 4 ½ % of the GDP. This is a concern and we need to find and figure out how that is going to be dealt with.
What benefits/implications has it brought for the insurance sector?
Specific to the insurance industry, I would say that even though Section 88 benefits have been taken away, it is encouraging to note that in lieu of that he has introduced an amount of up to a lakh of rupees that people can contribute to and take a deduction on.
What it does is that, it widens the base and opens this facility to all the people who wish to invest and hence provides opportunities for people to do significantly more elaborate life insurance and pension planning and avail of this deduction of to a lakh of rupees. However, there are certain clarifications within this in terms of on which are the vehicles that would enjoy tax deduction which has to be clarified.
On a last note, from an employer's perspective, this whole idea of a fringe benefit taxation just does not seem to make sense and among all the good things that have happened in the budget, this element is a little uncharacteristic and goes against the spirit of what the FM has attempted to do. In all honesty, we need more clarity and need to know what is the rationale behind this and what is the methodology being used.
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