Director, Wonderland Consultants and tax and investment advisor, Sandeep Shanbhag tells you what to do and what not to do before the budget. Our experts also tell you what small businessmen can expect or wish for from this budget.
Name: Sandeep Shah Age: 26 Industry: SME/Manufacturing Income: Rs 300,000 per annum (gross) Tax: Rs 40,000 per annum Investments: Rs 50,000 in insurance, Rs 70,000 in mutual funds and Rs 80,000 in fixed deposits. (Cumulative amount) Debts: Car loan, EMI of Rs 9000 Loan amount: Rs 2 lakh over 3 years.
What Sandeep should do now to plan his money better? Sandeep Shanbhag advises: He needs to increase his savings as much as possible. Insurance is not for saving money. He could look to diversify into mutual funds. Assuming that businessmen don't have a regular source of income, investing in Gold Exchange Traded Funds (ETF). This will give a kind of stability as a source of income. Gold ETF is a new innovations and a new product in global markets. You can buy 1 gm of gold and it would have no risk in the form of purity, theft because it's in de-materialised form. So it would be a wise investment.
What does Sandeep expect from the budget? There are two things, I think, will help Small and Medium Enterprise (SME) like me. 1. Bank interest rate offered to SMEs should come down drastically. The current interest rate of Benchmark Prime Lending Rate (BPLR) is about 13.5%, which is exorbitant.
2. Infrastructure. There's a government policy that undertakes technology upgradation projects for SMEs, which is funded through Small Industries Development Bank of India (SIDBI). The scheme has not percolated to all other banks. Hence, SME's lose out a lot on the subsidy available.
What experts expect from the budget for Sandeep Kamal Aggarwal of Ernst & Young says... Given the buoyancy of indirect tax collection in this fiscal, the trend of reducing customs duty may continue this year as well. But due to early signs of slowing down of manufacturing sector in India, the Finance Minister may have to be discreet in his approach towards reduction in customs duties. This may prevent him from reducing the rate of basic customs duty across all sectors, rationalisation of duties in certain sectors may not be ruled out.
Sanjeev Jain of Ernst & Young says... Government may consider widening the scope of presumptive taxation under Section 44AF to include various small scale businesses (having a turnover of less than Rs 40 lakh) which can include manufacturing, tailors, beauty parlours, small restaurants, software ancillary units etc.
Tax expert Subhash Lakhotia says... The payments made for pension plans should have a separate limit of deduction.The present tax deduction available as per Section 80CCC is inclusive of the deduction available as per Section 80C.
The service tax, especially for Mediclaim policy should be completely exempt from tax. This will lower the burden on those taxpayers who would take health insurance. The limit of deduction in respect of premium for Mediclaim policy should also be enhanced. Presently, Rs 15,000 per annum is the maximum amount that qualifies as deduction (as per Section 80D) for payment of mediclaim policy premium and for senior citizens it would be Rs 20,000 per annum.
