Union and Delhi Budget-2010...Moving in a Direction

I am happy with the movement happening in financial planning in India. Finally, government have started sparing the salaried person and started sharing the burden of national expenses on high income but zero tax paying self employed people.

Lowering of Income Tax slabs and increasing excise duty means that rather than taking on individuals which have the weakness of leaving money, they have started taking on good and services. So be it LCD TV's, Cars, Electricity or Cooking gas, self employed people have to pay as much as a salaried person.

Let me explain this in detail:

If govt expenses are Rs 100, they were taking all those from Salaried people before in form of income tax. Now, they lower the tax rate, and thus gets only RS 80 from these people. The rest 20 bucks from increased indirect taxes like excise, service tax etc.

But this Rs 20 is shared by everyone and actually mostly by self employed people who never pays income tax

Similarly in Delhi Budget, the bias seems to be going with more goods coming under tax net which eventually lead to more people leading to pay for government expenses.

Though people are complaining about increased prices of fuel and other commodities, it spreads economic burden on all rather than only few salaried individuals. People also compares our rates with USA rates and how USA manages with such lower taxes and fuel prices, the reason is because there everybody pays income tax. This difference should be clearly understood. When VAT was introduced some years back,it was speculated that the black economy would end but it has failed to do completely. In this scenario, I think increasing indirect taxes is the only way to bring more people under tax bracket.

Finally, good sense seems to be prevailing among policy makers.