The most obvious is the abolition of long-term capital gains tax and a reduction in case of short-term capital gains tax to a flat 10 per cent. This measure would particularly benefit all those investors, who have been holding their shares for quite some time and have not been keen to sell, due to the capital gains tax payable at the rate of 20 per cent.

Thus through a review of the capital gains taxation, the finance minister has acceded to the long standing demand of investors. This measure should boost retail participation in the secondary market, as more and more small investors would be inclined to book their long-term and short-term capital gains.

In respect of income tax exemption limit, which has been hiked for individuals from Rs 50,000-1,00,000, it should be noted that even though the limit for payment of tax has been raised, there is no change as far as filing of return of income is concerned.

Every person having an income of more than Rs 50,000 will have to continue to file income tax returns. Taxpayers crossing the threshold limit of Rs 1,00,000, however, will be saddled with full tax liability, alongwith the proposed education cess.

While the finance minister has provided some goodies to all classes of investors, it is the consumers at large who will have to bear the extra burden, through the hike in service tax rate to 10 per cent from 8 per cent earlier. This itself could be considered a small mercy when as it was widely expected that the rate would be increased to 12 per cent.

Secondly, today 58 services are already under the service net and with the proposed inclusion of 13 more services, the total number of services that will subject to tax will go up to 71.

One service that will have wide impact on all consumers is the service tax on transport of goods by road, as most of the goods do get transported by road. In addition, services like outdoor catering, construction of commercial and industrial premises, travel agencies, etc., will also have a bearing on the consumers’ pocket. Even life insurance premium will also be subject to service tax.

For example, if the premium of Rs 1,000 comprises of Rs 800 as investment and only Rs 200 as premium towards life insurance, then service tax will be chargeable only on the amount of Rs 200 being the risk cover premium. Presently, stockbrokers are subject to service tax and now the budget proposes to include sub-brokers as well.

Another area where service tax will have appreciable impact on investors, is in the field of financial services. Financial services such as lending, overdrafts facility, bill discounting facility, providing guarantees, safe deposit lockers, issue of cheques, demand drafts, pay orders, etc., would be subject to service tax. Investors should note that no service tax will be leviable on the interest amount that would be charged by the banking companies/financial companies, but only on the service charges that may be levied by such a bank/financial company.

Notwithstanding, the facility of credit of service tax is being extended to all the services, but with more and more services coming under the net, consumers will have to eventually bear the increased burden. There is a need for a separate enactment to comprehensively cover the law relating to service tax. In fact, there is a bit of confusion in respect of some of the services, which are ambiguously defined and invariably lead to problems.

If a particular service is not chargeable to tax and due to some ambiguity, the supplier of the service charges a tax, then the consumer has to bear the burden. On the other hand, if another supplier of a similar service does not charge service tax, he would stand to gain as his rates would be lower and would do more business.

Another hidden burden that consumers will have to bear is the education cess. No citizen would really crib about paying a small amount of 2 per cent for helping the less fortunate children to get primary education. Though on the face of it, the education cess would be only 2 per cent, but in reality consumers will have to bear a much bigger burden.

The cess is not only what they would be directly paying on their income tax, but they will also be indirectly paying education cess on excise duties, customs duties and service tax. Thus, the actual amount that will have to be borne by the consumers by way of education cess would be much more than 2 per cent.

However, the issue is not about the amount that would be collected by way of education cess, but the real issue is the utilisation and implementation. Having regard to the past performance of successive governments and knowing the attitude and efficiency of Indian bureaucracy, there are slim chances that the amount so collected will be really utilised for the an avowed object.

If the government really means business, and there is no reason to doubt its sincerity, then it is imperative for them to create an effective machinery for executing the education plans in the most effective manner.

Another small measure, which is more practical in nature, is the upward revision in the level of stamp duty on receipts. Presently, revenue stamp has to be affixed on a receipt of Rs 500 or more; the budget has proposed to raise this level from Rs 500 to Rs 5,000. In other words, no revenue stamps will have to be affixed on receipts below Rs 5,000..

The author is a Company Secretary