Budget 2013-14: Middle class will pay more.

This budget will bite the average citizen in more ways                  

                                                          

                                                                             Pay more to eat, 

                                                            Pay more to talk,

                                           Pay more to watch, 

                           Pay more to travel,

       With the pain, some gain. 

           AT first glance, the budget may appear harmless to the middle-class. In fact, it might even appear friendly what with all those improvements in housing loan deductions and stock market investments. But make no mistake, this budget will bite the average citizen in more ways than one.

Pay more to eat

Just take the seemingly innocuous proposal to impose service tax on all air-conditioned restaurants. With most decent restaurants — we are not talking of the up-market ones here — climate-controlled, eating out will become at least another 12 per cent more expensive. Remember that restaurants are in the process of revising their price-lists even now with rising prices of food commodities.

Pay more to talk

Cellular phones are now a necessity and smartphones are increasingly becoming so as they help you do your daily business on the go. As much as 97 per cent of all telephone connections in the country are cellular. Yet, smart phones (or phones that cost more than Rs.2,000) will now become pricier with the sharp rise in excise duty to 6 per cent from 1 per cent. Apart from driving business to the grey market, this proposal will also undo the efforts to push people into using their mobiles extensively for transactions.

Pay more to watch

Mr. Chidambaram has also not spared entertainment. The four metros are now compulsorily digitised for cable connections but the Finance Minister has doubled the import duty on set-top boxes to 10 per cent making them costlier in an environment where the citizen has little choice but to comply. Never mind that the country may not have enough capacity to produce set-top boxes on the scale required. The priority is to protect those who are in that business.

Pay more to travel

Apart from these, the allocation made for fuel subsidy is also lower which means that the Centre is well set on its course of freeing prices of petroleum products. This, in turn, means that diesel and cooking gas will see a sustained rise in price if global oil prices do not retreat.

Mr. Chidambaram has also made property transactions more cumbersome. Henceforth, buyers of immovable property will have to deduct a tax of 1 per cent of the sale value where it exceeds Rs.50 lakh and remit it to the tax department.

With the pain, some gain

Balancing these proposals that will be painful to the middle-class as a whole, are the ones that will cheer a section — investors — and those planning to buy a house. The tweaked Rajiv Gandhi Equity Savings Scheme appears friendlier and will help those looking to invest in the stock market and also get a tax-break in the process. The reduction in securities transaction tax and the soon-to-come inflation-indexed bonds should also cheer up investors.

Similarly, the generous interest deduction on housing loans of Rs.1 lakh, in addition to the Rs.1.5 lakh already available, will go a long way in pushing the fence-sitters to invest in a house.