AS Finance Minister Jaswant Singh gears up to present his first Budget on Friday, he has to make a very difficult choice: either implement his advisor Dr Vijay Kelkar’s report on direct taxes or just trash it. With the entire middle-class opposing this report, it will be very difficult for Singh to convince even his own party about the strengths of the report.That the report was jinxed from day one could be gauged by the fact that almost all sections of the society revolted against it and a committee appointed by the ruling BJP, headed by Rajnath Singh, has advised the government against implementing it.In this scenario, what are the options before the taxpayer? Well, if analysts are to be believed, Singh is not going to make drastic changes in the current income-tax (I-T) regulations. In fact, the current rates are already the highest in the world and Singh’s predecessor, Yashwant Sinha has seen to it that you pay taxes even for health care (at a rate of 20 per cent), for your insurance and even for taking your kids out for holidays!Reports are already out that if Singh taxes the middle-class more, it would be suicidal for the ruling party as Assembly elections to some crucial States will be held by the end of this year. In order to save your taxes, you can continue to invest in various tax saving bonds, like National Savings Certificates, Public Provident Fund and insurance. Despite low interest rates, they are the safest instruments to invest.If you are not covered by health insurance, it’s time you take a medical cover as cost of medical treatment will be touching alarmingly high rates every year. Soon, it will be very difficult for an average middle-class person to go to a decent hospital as charges will be touching the skies. Remember the BJP government has levied a 20 per cent tax on your total bill. For a one year cover, a medical cover should not exceed Rs 2,500 for a 30-year old person. It will give you a cover of Rs 1 lakh and, of course, the peace of mind.In his report, Dr Kelkar had prescribed that exemptions on home loans should be removed in the next few years in phases despite most home loans having longer tenures. It would have not only financially crippled a home loan borrower but also the limping construction industry which was slowly inching its way out of recession. If you have not taken a home loan till now, it will be better to wait for the next few days till Singh spells out his strategy. Any change in exemption on home loans laws will result in drop in new home loans affecting crores of construction workers around the country. ‘‘Low home loan rates and income-tax rebates have resulted in all unsold properties in Mumbai getting sold out. I think these benefits should continue so that the industry can boom,’’ says Videocon Properties chairman Venugopal Dhoot.With Sinha already levying a surcharge of 20 per cent on insurance premium, Singh does not have much scope for making life insurance more unattractive. But taking a life insurance for protection is a better idea. As of now, the 20 per cent rebate on premium is still on, so you have one more reason to buy an insurance product. Contact your financial advisor right now before Singh plugs that loophole. The private sector insurance companies are offering very good products which is making government-owned LIC to re-draw its strategies.Small shareholders are asking the government to reduce the burden of dividend tax. The stock markets are already going up based on reports that the government may lift the dividend tax. But do not go on a share buying spree right now. “The Indian stock markets have some of the world’s best punters. Do not race along with them or you will end up losing more money than before. Wait till the Budget euphoria is over,” advises Pawan Dharnidharka, a Mumbai-based stock dealer.For senior citizens, the falling interest rates regime have caused a lot of financial damage. Many senior citizens must be wondering where to invest their hard-earned money. Post-office savings are a good investment where an investor gets good returns plus his savings are safe. Many investors have already lost funds in companies which have promised extraordinary returns. There is no way out for them to get back their funds. The Budget is not expected to hurt senior citizens more (they have already done that before), so take your investment decisions based on returns and safety.With the prevailing high prices of gold, the yellow metal is already out as an investment option for a small investor. Till the war clouds in the Gulf clears, investment in gold is a risky option. Prices are bound to fall once the US-led coalition tones down its war rhetoric. Buy gold at peace time prices as the Budget will not make it more expensive or cheaper than before.For the last three years, the Budget has not brought happy news for a small investors. One has to just wait-and-pray that Singh will not make the life of a small investor worse than before.
