For the first time in the annals of budget history we have a budget that has given something to everybody.

Mr Yashwant Sinha has focussed on reforms and developments realising that this and only this is the base for any economic growth of any country.

Expecting larger compliance and increased base of taxpayers, he has actually reduced the Income Tax while smoothening and streamlining areas needing attention.

This is the first budget that focusses its attention on all sectors and does not indulge in robbing Peter to pay Paul.

It encompasses agriculture, infrastructure, education, research and development, textiles, information technology, entertainment, cars, transportation, storage, food processing, shipping, and what not. While protecting the Indian industries at large by imposing very heavy tariffs on imports, it has proffered many sops to exports.This is more of a growth budget than a tax budget.

The following are some of his praiseworthy actions:

1. During his budget speech of last year, he had promised to do away with surcharge. He has kept the promise. Only the newly introduced 2 per cent quake surcharge is retained. This is not only creditable, but lends credibility to his current promises.

2. He also reduced the dividend tax from 20 per cent to the original level of 10 per cent, actually from 22.4 per cent to 10.2 per cent when one accounts for the abolished surcharge.The dividend tax was a bone of contention for every taxpayer.

3. The deduction of interest on housing loans has increased from Rs 1 lakh to a whopping Rs 1.5 lakh on self-occupied property. The deduction for repairs and maintenance on other properties has been stepped up to 30 per cent from 25 per cent while dropping all the other allowances with a view to simplify the Act.

4. Section 54EC providing exemption from capital gains by parking the amount of capital gains in bonds of NABARD and NHAI was tepid. Its scope has now been extended to Rural Electrification Corporation Ltd. But again understandably it will be equally tepid. Now, a new Section 54ED has been introduced to provide similar exemption on capital gains arising out of sale or transfer of listed securities or units of UTI/MFs if the capital gain is invested in equity shares forming part of an eligible issue of capital offered for subscription to public.This will serve as a boost to the primary market, which has lost favour from investors, particularly the retail ones, who had burnt their fingers during 1994 IPO boom.

5. The need to procure Income-Tax Form 230A as a prerequisite to registration of any immovable property was an inconvenience to the assessees, and providing fun and funds to the assessing officers. With the laudable intention of getting rid of the Inspection Raj, this requirement has been dropped.

6. The one by six scheme of Mr Sinha, modified from the two by four scheme of Mr Chidambaram, has proved to be quite successful in widening the tax net from about 1 crore assessees to 2.4 crore. This scheme is currently applicable only to 133 major cities with a population density of over two lakh. It will now be extended to all the urban towns. I only wonder whether the department has the infrastructure to handle the astronomical number of returns arising out of this diktat. I am afraid this is not a worthy measure from cost-benefit point of view.

Forcing an honest and genuine citizen to file return without an income worth a mention is nothing but harassment to the assessee. It is a wasteful, meaningless and impotent exercise for the department.

I have repeatedly observed that there are quite a number of people willing to file the returns but hold back only because of the unknown fear of the department actions. Offering all newcomers an ongoing amnesty will certainly go a long way in productively expanding the tax net.

7. The procedure for taxing the perks of salaried employees has been simplified. It was studded with a million ifs and buts. Now, the cost to the company will be the value of the perk except in the case of car and housing where value of the perks is well defined. In my opinion, though this measure will put a little additional tax burden on some of the employees, it will eliminate a lot of litigations simply because of clarity of provisions.

8. Dividend stripping was an ethically wrong activity, which reportedly drained over Rs 1,000 crore from the exchequer. This loophole is now effectively plugged. Now, the provisions of the capital gains/losses cannot be claimed if any securities or units are purchased within three months prior and sold within three months after the record date if the dividend is tax-free. In such a case the loss can be claimed only to the extent that it exceeds the dividend.

9. The The income arising out of lotteries, card games, etc, is taxable at 40 per cent. This is unreasonable as the maximum rate in the case of individuals is only 30 per cent.Now we shall have uniformity as such income will be taxed at the rate of 30 per cent. It is clarified that the prizes from television game shows will also be taxed at this rate and TDS will have to be applied for.

10. Where was the need to bring the ceiling on Section 80L down from Rs 15,000 to Rs.90,000? The earlier ceiling was effectively Rs 12,000 because Rs 3,000 was earmarked for interest on government securities which are not easily available to the common man.

11. The exemption limit for TDS has been brought down back to the old level of Rs 2,500 only. Retrograde step! In the wake of the current conditions, this amount is so low that all the people of small means like pensioners, widows, clerks, retired persons will come under the net of TDS though outside the net of Income-Tax. This step has been disliked by many.In my personal opinion since an assessee is required to pay an advance tax, he should have no grouse against TDS. There are a number of individuals who split their investment in many accounts just to avoid tax and TDS would force them to file returns. Therefore, this a commendable action though it will hurt quite a few genuine non-assessees. In any case, an escape route through filing Form 15H is available to them. My only consternation flows from the increase in the consequent astronomical paperwork.

I sincerely hope that the department goes ahead with its computerisation programme expeditiously. Collecting taxes through TDS or dividend tax is indeed an acceptance of the department's inefficiency. Expanding service tax net falls in the same category.

Last but not the least, the interest on small savings and provident funds is proposed to be slashed down by 1 to 1.5 per cent. This surely will hurt persons of small means who are totally dependent upon these avenues for their livelihood and have lopsided views about safety. However, I am personally happy with these provisions, which attempt to kill two birds with same stone. One, it will take out the government from the debt trap and two, the funds for investing will flow to the equity or debt markets which need this support very badly. The best part of the entire exercise is that all the figures are in proper place and the fiscal deficit is under control. A quick recap would suggest that Mr Sinha appears to have faith in himself in collecting higher taxes by widening the net, tightening the collection machinery, weeding out thieves and surplus government staff.

Mixed measures