‘Dream’ Budget
Posted by Ashish on March 1st, 2005
The Finance minister came up with the new budget that is being publicized as another dream budget from Mr. Chidambaram. Well, I haven’t gotten a chance to go through it in great detail but it, indeed, looks to be pro poor, pro middle-class budget. In fact, Times of India published an article with their calculation on the income tax that clearly suggested that I will be saving quite some money in the taxes. Well, I am definitely happy at that 
One thing in the budget that I am going to talk about here is the introduction of 0.01% tax duty on cash withdrawn if it is in excess of Rs. 10,000. Mr. Chidambaram, I appreciate the idea of discouraging cash transactions making it difficult to evade tax. But I think the problem lies in its implementation and not the idea.
Let’s consider this:
Bad guy - wants to save tax. I am a end customer and went to this bad guy to buy some goods worth Rs. 10,001/. I have 2 options - either pay him Rs. 10,001/ cash (where I will have to pay Rs. 10 extra to the government) or try paying him a check with the extra Rs. 10 (because he will not be willing to pay the extra amount, the way they do for credit card transactions). Whose loss is this? Mine - the end customer - so even the idea being good - the implementation caused more inconvenience to the end customer instead of the bad guy.
In fact, it is still not the worst case scenario. The fact remains that check transactions are still not very common in small to medium sized shops. So, in those cases, I will not be left with much of a choice other than spending Rs. 100.01 for every Rs. 100 that I should have spent.
Mr. Finance Minister, I know that you are re-considering it - your decision is much awaited. Not that this affects me really, but I hate to see a bad implementation for a good idea.