This time around also it was no different, notwithstanding the fact that it was not going to be a full budget. It was widely speculated that the exemption limit for filing of income tax return would be raised so as to make the middle class happy. Of course, nothing of the sort happened, though the finance minister did promise to reconsider the present tax exemption limits. While there was no doubt that what the finance minister was to present before the Lok Sabha yesterday was to be the Vote on Account, but that itself got caught in semantics. We Indians are known for our verbosity, but then if those Indians happen to be Parliamentarians, then one can be assured of serious verbal duels. Our Parliamentarians did not disappoint us. No doubt, initially, there was some sense of surprise at the way the Lok Sabha session seemed to be getting underway, but soon it was apparent that after all the opposition had to make its presence felt. After a loss of about 70 minutes the finance minister rose to present the Interim Budget that would enable the Central government to meets its constitutional obligations in the coming months, till the elections are over and the new government is in place.

Though lots of expectations were built-up, in the end it was much of what should have been expected in the first instance. One should not loose the sight of the fact that the hands of the finance minister were tied to a large extent as he was not presenting a regular budget but a mere Vote on Account. Still the finance minister managed to do a pretty good job. Of course, one should not forget that the government has been announcing various goodies during the last few weeks, trying to appease different sections of the society.

So far as investors are concerned, there was a cheerful news for them as the period for the long term capital gains tax break has been extended by 3 years. This should bring cheers as the expectation in this regard was that the period may be extended only for the next four months, by which time the new government would be in place. Therefore, it came as a pleasant surprise that the benefit has been extended for the next three years. However, till now this benefit is restricted only to BSE 500, this needs to be extended to all the shares. Hopefully, the finance minister would look into this aspect and ensure that every investor is able to enjoy this tax break. Unfortunately, the finance minister was totally silent about the tax on dividend income.

There are some other pieces of good news that should bring additional cheer on the face of investors. With a view to reducing the transaction cost, the Central government has decided to reduce the stamp duty by half. Now before you start celebrating thinking that that you will be saving few lakhs on your next property deal, think again. The immediate impact of reduction in stamp duty will be only in respect of stamp duty payable on transfer of shares in the material form, as the demat is exempted from such stamp duty. On all instruments where stamp duty is payable by virtue of the Central government diktat, the stamp duty will stand reduced. At the same time, the FM has assured that his government will try and convince the state governments as well, to reduce the stamp duty payable under the State laws.

It is important for the various state governments to realise that high rates of stamp duties tend to adversely affect business transactions. Conversely, low stamp duties would encourage investors to buy and sell properties and that would enable the state governments to generate adequate revenue and will also help the markets as well. Hopefully, the governments would change their attitude and ensure the growth of real estate market by having sensible rates of stamp duty.

Indian investors should be happy that, now while returning from their overseas trips, they can bring in more goodies as personal baggage, without paying any duty on them. The limit on this account has been doubled to Rs.25,000/-. Moreover, even the duty payable on dutiable baggage has been reduced from 50 percent to 40 percent, though this will be bad news for the grey market operators.

The finance minister (FM) also announced that the banks would be asked to cut their rate of interest. However, this would not mean much for the average investor as they are still milked by the banks. The government should ensure that the rate of interest being charged by the banks on loans against shares is reduced as these are secured loans which directly help the capital market. In any case, loans against shares are in no way inferior to auto loans which are available at much lower rate of interest, this anomaly should be removed by the finance minister in the coming days. The FM has spoken all the politically correct things while presenting the interim budget, but there is a need to do much more for the small investors who form the back bone of the capital market. One can only hope that while presenting the regular budget, the FM would address the needs of the small investors in a better way.

The author is a practising Company Secretary