CHENNAI: Union budget 2006 is a "risk-free budget." As it provides a big relief to farmers, it sounds "populist." The Fringe Benefit Tax, which has been modified, should have been abolished. Increase in service tax will ultimately affect consumers. For an equitable balance between direct and indirect taxes emphasis should have been on direct taxes. Corporate tax needs to be lowered to ensure better compliance. Every tax levied must be convincing to tax payers.

These were among the points highlighted by speakers at a symposium, jointly organised by the All India Tax Payers Association (AITPA) and the Southern India Rajasthani Chamber of Commerce and Industry.

A.C. Muthiah, industrialist, said the budget was "just like a report card given by the Finance Minister." The good news was there was no bad news. The budget lacked Finance Minister P. Chidambaram's bold initiatives. The focus should have been more on the manufacturing sector. Some concessions have been given to the automobile sector, that too for small cars.

The budget was not helpful to component manufacturers. Though a lot of credit has been given to contain fiscal deficit, the losses in the oil sector will add to the deficit. The increased allocation of Rs.16,000 crore for the energy sector was a welcome move as it would augment power generation.

Pointing out that the inclusion of fixed deposits in scheduled commercial banks for five years for calculating Rs. 1 lakh exemption for income-tax would garner additional resources for banks, he said the Finance Minister could have gone beyond Rs. 1 lakh.

The increase in service tax would push up the end prices of products. "A reasonably good budget," Mr. Muthiah said at the end of his address.

A distortion

Expressing his personal views, N. Rangachary, former Chairman, Central Board of Direct Taxes, and Adviser to Andhra Pradesh Government, said things which were not income were being taxed under the Income Tax Act.

There was no compositeness about income. It was time the Service Tax was delinked from the Finance Act 1994 and brought in as separate legislation.

Ashok Kumbhat, president, AITPA, said the budget was "safe and sedate and risk free."

The Finance Minister could have taken the risk of marginally reducing the taxes.

Santhosh Datta, Chief Commissioner of Income-Tax-I, Chennai, J. Sridharan, Chief Commissioner of Customs (preventive), Chennai, spoke on the salient features of the budget.

K. Vaitheeswaran, advocate, T.C.A. Ramanujam and S. Rajaratnam, tax consultants, and V. Murali, central council member, ICAI, were among those who addressed the symposium.

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