Monday, February 27, 2006

Salaried class finds city's high cost of living unfavourable

Salaried class finds city's high cost of living unfavourable

The Hindu

`Raising IT exemption limit to Rs. 2 lakhs will be reasonable for the salaried'

# House rent is less in Hyderabad, and I am not able to save anything: Balaji
# Life insurance is best tax-saving investment and I have plans to enter the share market: Sunil Kumar
# Value Added Tax has affected small business entrepreneurs: Sonia Varma and Daksha Surendranath
# Budgets make a lot of noise about increasing tax collections yet there is nothing concrete to show in terms of results: Sudhindra
# Make textile exports and imports easy and do not increase duties on textile imports: Meenakshi, Pranjali and Surabhi
# I will `wait and watch': Shankar Singh

BANGALORE: The Union Budget is unlikely to raise the Income Tax (IT) exemption limit for the salaried classes from the existing Rs. 1 lakh. But for the large number of Bangalore's salaried men and women, raising that limit to about Rs. 1.5 lakh or Rs. 2 lakh will be a big bonus. Yet that remains only an expectation, not likely to figure in this budget.

Still in the early days of his job, Balaji from the city-based Mindtree Consultancy feels that a Rs. 2 lakh limit would be reasonable for the salaried, now reeling under the city's ever increasing cost of living. "The house rent, for instance, is much less in Hyderabad compared to Bangalore. I am not able to save anything with this tax structure," he told The Hindu.

Raising the limit will make a big difference to the employees from middleclass families, felt his friend, Sunil Kumar, employed with Convergence.

For the friends, like most young, new employees in Bangaloreans, life insurance remains the first priority while looking for tax-saving investments. But Mr. Sunil Kumar has plans to enter the share market, only after he gains some mastery over the basics.

In their makeshift sari exhibition outlet in Safina Plaza, Sonia Varma and Daksha Surendranath were not optimistic about the impending budget. The Value Added Tax (VAT) regime, for instance, had affected the small businesses. "Business people are, as it is, against VAT. This budget will be bad for small entrepreneurs, mainly because of VAT," said Ms. Varma. The glut of competitors in the textile sector had apparently affected their profit margins.

Aggressive marketing by the big glitzy brands had marginalised the small shopkeepers. "Our business has come down. Even the rural artisans, the people with handicrafts, find it tough to market their ware," Ms. Daksha Surendranath said. The budget is unlikely to give much hope, she added.

Being an acoustic consultant, Sudhindra could be mistaken to be out of touch with the economy. But his views on the budget were strong and clear: "The budgets make a lot of noise about increasing tax collections. But where is the transparency. VAT has, no doubt, increased tax collections. Yet there is nothing concrete to show in terms of results. And, I feel, they should do away with the unwanted subsidies. The farm sector is living free. Some of the farmers are millionaires."

For fashion designing students, Meenakshi, Pranjali and Surabhi, textiles and the apparel industry were close to their chosen careers. They wanted the budget to make exports and imports easier. Increasing duties were a strict "no". "India is rich in the garment sector. It needs to be exploited for growth," felt Pranjali.

Businessman Shankar Singh's life was all about seeds and fertilizers. Obviously, he wanted the 4 per cent VAT on pesticides to be reduced. Analysts had predicted that the budget would have good things for the farm sector. Mr. Shankar Singh wanted to play the "wait and watch" game. After all, the budget will be presented on Tuesday.


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