Budget Musings -2

Let me put it like this . Indirect taxes pinches all equally , but poorer segment feels more pain than the well off.  Whereas, the direct taxes pinches the people variedly according to their wealth, so everybody feels same pain. Hence direct taxes are progressive. And economists opine that ratio of direct taxes should be higher than the indirect taxes.

 As discussed, by nature, indirect taxes are regressive. But, by the way of tax policies, exemption etc., tax policy tries to makes it, to put it correctly, less regressive. We discuss regarding this elaborately.

I thought, I should say some background about its nature, so that   our understanding of budget is made easier.

As a common man, I feel that first slab of Rs. 2,00,000 is very less, but considering the overall fiscal situation this decision might be unavoidable. Increase in tax slab might again have a deeper dent in revenue.

As we all see in the news, real hot pepper lies in indirect proposals; Widely Termed as harsher, unprecedented. This is affirmed by the words of Hon`ble FM, who quoted Shakespeare “I am being cruel , just to be kind “. We shall see , what s cruel? what s kind in it 

          
         As is being discussed in media,   Its cruel because,  increase in excise duty and service tax to 12%  surely would push up inflation. Many services earlier not within the ambit of tax net may be covered this year, due to changes in act this year.


What is kind in it ?