The Budget has struck a balance between enhancing consumption and ensuring inclusive growth.
Nilesh Shah: deputy managing director, ICICI Prudential AMC
The Budget has struck a balance between enhancing consumption and ensuring inclusive growth. It has tried to create a balance between urban and rural population covering various social strata.
From the mutual fund industry perspective as well, announcements regarding direct personal income taxation is positive as it will encourage investments into various financial options including mutual funds. In fact, tax planning has emerged as one of the most popular ways through which retail investors participate in the mutual fund.
Development of fixed income market will move into the next orbit with the launch of exchange traded currency and interest rate futures market, rationalisation of stamp duty and exemption from TDS for corporate bonds. This announcement seems positive for the mutual fund industry and will aid in deepening the bandwidth of fixed income markets.
The mutual fund industry will benefit from the increase in short term capital gains tax from 10% to 15%, which will help bring long-term money into equity markets.
Another interesting announcement pertained to the acceptance of permanent account number (PAN) as the sole identification number for all participants transacting in the financial market. This bodes well for the market.
The market will benefit from the rationalisation of dividend distribution tax on holding companies. But, the conversion of STT from taxes paid to expenditure is going to disappoint despite being a step in the right direction.
The waiver of farm loans will spur rural consumption, while the announcements on non-taxation of reverse mortgage income will spur urban consumption.
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