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Budget '05-06 Views of Venkatesh Mysore,
Managing Director, MetLife India Insurance
Date:01/03/05
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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