Dear Members

Greetings,

The much awaited event and the historic day of February 28, 2006 turned out to be damn squib and a non event. The expectations of the industry has reacted very positively to the Finance Bill. The stock market which reacted sharply and positively is the manifestation of the industry flattery to budgetary proposal. I am not being cynical or a pessimist of the Budget 2006 but however one need to understand the hard realities and the grassroot facts. One needs to appreciate that if the Finance Minister had made no changes in his budgetary proposals the economy would have reacted in a similar manner . The economy is on a growth accelerated path and has gained momentum. The momentum would continue. Much of the relief given would benefit the MNCs.It has been condemned that the Budget 2006 is a pro MNC budget. On the macro level and a larger canvas the Budget may seem to be good. Growth will not be propelled by this Budget 2006 but the acceleration in the economy will continue.

On the flip side the proposals relating to the Direct and Indirect Taxes needs our attention.

Firstly, the retrospective amendments which have been brought about needs to be objected. More particularly when these amendments are politically motivated, and inefficiency of the department is supported by amending the law, the failure to make the department accountable and responsible for their acts of omissions and commission should be vehemently opposed. Amendment which are brought about to overrule judicial decisions pronounced by the courts is unfair . It needs to be strongly opposed.

The other notable aspect of the Finance Bill 2006 proposal which has made be sad when philanthropy is taxed. The taxing of anonymous donations to institutions other than religious trust at the maximum marginal rate is very unfair. Though there may be justification from the Government’s point of view, one need to take a broader picture into consideration. The logic of exemption to Religious Trust to my mind is out of place. Let philanthropy be rewarded and not penalised. The industry expectation of scrapping of the FBT which form an employee based tax has now become a presumtive tax did not come about.

On the service tax front the enhancement of the tax rates will bring an additional burden on the tax-payers. It would have been better to put the service tax law into place first . The fact that all services rendered by the Chartered Accountants is not a welcome amendment. It is discriminatory.

The Finance Minister very proudly announced the several educational projects. The Government has collected the education cess. The Government needs to account for the same. We will have to wait till the end of the month when the Finance Minister gives his Performance and Outcome budget statements. Beware, the Finance Minister is a sharp and intelligent lawyer, an astute politician and has a gift of the gab. He could well juggle the words and figures too. The Chamber would be making up the post budget recommendations to the Finance Minister on the Finance Bill 2006.

The second major event that happen immediately after the Finance Minister’s Budget Speech was the visit of the President Bush of the United States of America. He got a mixed welcome. The Nuke-deal signed with the U.S.A . which the media reports say that it has given recognition to India as a Nuclear Power State. India is a great nation and will soon be a super power to reckon with .

The RRC at Hyderabad was a very successful event. It was a very joyful experience. It was learning in leisure. The RRC had all the ingredients of learning, fun and competition. A worthwhile experience Mr. Mahendra Sanghvi, Chairman of the RRC Committee and his team more particularly the support guidance and advice from our past President Mr. Kishor Vanjara must be applauded.

My best regard to you and all in your family.

With warm regards