Mr Keki M. Mistry, Managing Director, HDFC Ltd:To the industry in general, it is a good Budget. The framework of the last two years continues. The reforms continue, the direction of reforms continues. And continuity is something very important. There are no changes in tax rates, which is very good.
But not enough has been done to inject liquidity into the system. You know liquidity is at a premium in India. The FII investment limit in government securities and corporate debt has been increased. This will inject some liquidity but that is not enough.
One thing we would have liked is opening up of External Commercial Borrowings to the banking and financial sector which has been stopped for two years now.
We also feel the government could have included investment in fixed deposits in section 80 of the Income Tax act for others too, and not just to banks.
Some anomalies have been corrected, for example, the one with respect to distribution tax on close-ended funds. One anomaly that may come up is that interest is allowed as deduction only if paid. Many banks and financial institutions have cumulative deposit products where interest is not paid but compounded and paid on maturity; we must not land up in a situation where interest is not allowed as a deduction.
The increase of service tax from 10 per cent to 12 per cent is not a small matter. Let us take a consultant who cannot show much expense.
- As told to Our Mumbai Bureau