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More relief under Section 80c of the Income-tax (I-T) Act, moderate tax rates and removal of the fringe benefit tax (FBT) top the list of what most of our respondents want from finance minister P. Chidambaram in this year’s Budget. Although the previous budget did not alter the effective I-T slabs significantly, many hope it could be different this year, with the elections looming large and the state coffers clocking a 42% increase in recorded tax collections between April and December. Meanwhile, with India set to hold on to a 9% gross domestic product (GDP) growth rate for 2008, the Union government wants to contain inflation and Chidambaram has urged banks to cut lending rates.

But, there is a rider. With crude touching $100, the government may pass on some of that cost to consumers. Oil subsidies would still continue, but plan for higher oil prices anyway, unless the government introduces a real populist Budget. Last year, the basic I-T exemption limit was increased by Rs10,000 for all, which translated to tax savings of Rs1,000. For individuals, it applies only if the income exceeds Rs1.1 lakh, and for senior citizens and women, it applies only from Rs1.95 lakh and Rs1.45 lakh. However, effective income tax rates actually went up because the education cess was raised from 2% to 3%. A back-of-the-envelope calculation shows that an individual earning Rs500,000, with a tax bill of Rs1.02 lakh, ended up paying Rs99,910—not quite a dent.

In addition, all employees are allowed to claim deduction on their pension contribution, subject to an overall limit of Rs1 lakh per year. Previously, only government employees enjoyed this deduction, subject to a maximum of 10% of their income. In another change, the allowance limit to claim deduction for medical insurance premium paid was also increased by half to Rs15,000 per year and Rs20,000 for senior citizens.

Mint brings you the Budget expectations of six diverse groups of people from mutual funds, life insurance, general insurance, a tax expert, a financial planner, and a homemaker.

1) What are the three things you wish for from the Budget?

2) If you could end one thing, what would that be?

3) If you were the finance minister, what would be the one thing outside your industry you would want in the Budget?

4) What is the one thing you don’t want changed?

5) Which Budget disappointed you the most? Why?

6) One proposal you think is shot down in every Budget but shouldn’t be.

7) What would you consider to be inclusive growth, financial inclusion?

(Photo: Harikrishna Katragadda/Mint)

Tax and investment consultant, New Delhi

1.(a) Realignment and moderation of I-T rates: Our taxpayers would be happy if the maximum marginal rate for all categories is kept at 25%, inclusive of surcharges and cess.

(b) Eliminating the fringe benefit tax.

(c) A realistic perquisite taxation provision for employees with uniformity in taxing all categories of employees. For instance, the amount for transport allowance, which is currently exempted to the extent of Rs800 per month, should be increased to a realistic level, with deductions separately mentioned for tier I, II and III cities.

2.The language of the provisions in the I-T Act should be simple and easy to understand.

3. There should be a social security system for every Indian, especially senior citizens. If nothing else, at least a medical insurance cover should be available to every Indian.

4. Import duties on all articles.

5. In 2005, when the FBT was introduced it was so complex that a 40-odd page circular was issued to explain various clauses of the tax.

6. There should be some quantum of money that can be gifted by the husband to the wife, or the other way around, without inviting the provisions of clubbing of income contained under Section 64 of the I-T Act, 1961.

7. It is time the government realizes that the tax code needs to be simplified to help taxpayers understand various clauses.

(Photo: Ramesh Pathania/Mint)

Homemaker, New Delhi

1.(a) Bring down petrol and cooking gas prices because most families invariably spend more on fuel than food in our cities.

(b) Slash prices of food items.

(c) Decrease health-care expenses because in the metro cities either private medical care is very expensive or the government hospitals are below acceptable standards.

2. I would like to end all power cuts. In spite of our progress in various walks of life, a power breakdown takes us back in time.

3. The stock markets are doing very well. I hope the finance minister won’t touch this.

4. I would like to end the quota system and end reservation on grounds of caste, religion and gender.

5. All budgets eventually disappoint me because at the end of it all, everything translates into a price hike. Budgets are meant to keep track of all your expenses so that at the end of the month, you are able to see where all your money went. It helps one to know what expenses need to be cut, or eliminated.

6. In each budget, the ordinary taxpayer waits for petrol prices and railway fares to come down, but this never happens.

7. I believe it is growth that includes everyone from every field.

(Photo:Ashesh Shah/Mint)

Chairman, Association of Mutual Funds in India

1.(a) The definition of “equity" should include foreign securities and equity-linked derivatives as well.

(b) Fund of funds (FoF), which invest more than 65% in equity funds, should get the same tax treatment as an equity fund.

(c) The securities transaction tax (STT) at the investor level should not be levied. Similarly, STT shouldn’t be levied for investors in FoF and exchange traded funds.

2.(a) Permanent account number (PAN) is made mandatory for us and not for market-linked insurance plans, so we are at a disadvantage.

(b) Only public sector unit (PSU)-owned mutual funds can accept money from PSUs and postal savings departments. All mutual funds follow the same regulations of the Securities and Exchange Board of India, so why the differentiation?

3. Speedy execution of plans, ideas and projects.

4.The pass-through nature of the mutual fund industry as an investment avenue and the tax benefits to fund investors should be retained.

5.The year in which dividend in the hand of investors was made taxable.

6. Our proposal to remove STT on fund of funds (FoF) is still pending.

7. When I see an ordinary person, who saves between Rs100 and Rs1,000 per month, invest in a mutual fund and earn returns, which are higher than a bank deposit, it thrills me.

(Photo:Ashesh Shah/Mint)

Secretary general, Life Insurance Council, Mumbai

1.(a) Long-term savings, such as life insurance, should be allowed a separate window of Rs1 lakh under Section 80c exemption.

(b) FBT on group superannuation contributions by employers should go. Because of such provisions,the group superannuation business for life insurance companies has come down. After the imposition of FBT, most employers consider these contributions expensive.

(c) Carry forward of losses in life insurance companies should be extended to 12 years. Considering that life insurance policies could take 12 years to mature, the tenure to carry forward losses should be extended by five years.

2. Legislative caps on intermediary costs. To use distribution channels effectively, there should be no cap on agent commission while total expenses should be capped.

3. Stop mindless subsidies in all sectors.

4. I would not like to change the provision that makes insurance cover effective only on payment of the premium. Without the provision, people would stop paying premium money without caring for the cover. Outside my industry, I would not change any commitments under the Fiscal Responsibility Act.

5. Cannot recall.

6. Long-term savings window in 80c.

7. From an insurance point of view, when we ensure that there is no one without insurance protection for his person and possessions, then we can say there is inclusive growth. Visible signs of consumption should not be mistaken for ‘inclusive growth.’

(Photo: Madhu Kapparath/Mint)

CEO, Verdant Financial Advisory Services Pvt. Ltd, New Delhi

1.(a) Rationalization of income tax: It’s a burden shouldered by a very small percentage of the earning members of society. A larger section of society should be brought under the tax bracket instead of increases in tax rates.

(b) Reduction in subsidies: This, to my mind, breeds inefficiency and wastes our resources.

(c) Reduction in service tax because it is too high.

2. Nothing that pertains to our industry is so severe that it needs immediate attention.

3. Agriculture should be brought under the tax bracket. Despite the zero tax benefit that is being enjoyed by this section of the economy, its share in the gross domestic product (GDP) has been dropping over the years. Alternative avenues of support to this sector should be examined in light of the opening up of the retail sector. The government should look at it as a chief executive would—how to improve the contribution from one of its ailing activities?

4. The taxes on security trading (equity and debt).

5.The budget gives the government an opportunity to draw a road map for the country’s growth. Many such moments were lost and I think that in the recent past (looking at it the other way), we received a bold and sound budget when Manmohan Singh was the finance minister. Perhaps we were against the wall!

6. Reduction in subsidies.

7. When each and every Indian would be able to benefit from the rise of the stock markets.

(Photo: Ramesh Pathania/Mint)

CEO, The Oriental Insurance Co. Ltd, New Delhi

1.(a) Exempt health and all insurance policies sold in rural areas from service tax.

(b) Double tax exemption limit.

(c) Double relief under Section 80c.

2. I want to stop the unhealthy practice of getting more insurance business by making extra payouts than what the regulator permits. I wish I could end business corruption.

3. I would like hunger to be wiped out of India.

4. The insurance industry is taxed in a peculiar way in India. The method is different from other companies. I would like this uniqueness to remain. But at the same time, because of this special feature, some tax exemptions available to all others are denied to us because of inconsistent wordings in the law. These should be rectified but the unique treatment of taxation of insurance companies should never be touched or altered. In addition, I would not alter any of the exemptions already in effect. Frequent changes prevent entrepreneurs from planning long term.

5. One with no great relief to individual taxpayers, especially for the salaried class just like myself.

6. Review or abolition of FBT. These were introduced in the fiscal year 2005-06 to levy tax on perquisites provided by an employer to employees, in addition to the cash salary or wages paid.

7. Whatever relief is announced, budgeted and spent for the poor or people living below the poverty line should actually reach the intended.

Rachna Monga contributed to this story.

Tell us what you want in this Budget. Write to us at

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