With PC in charge of the Finance Ministry we can expect some dramatic sleight of hand changes in the tax structure. Here is an advance warning. Almost all of this will happen over the next few years:

a. Every government hopes that people save / invest for their old age. Simply because if they did not the government will have to spend on social security. OBVIOUSLY people should save for themselves whether there is a tax break or not. Sadly people DO NOT save/invest. So to encourage them there should be incentives. We have NONE. So it cannot get worse.

b. Crowding of Sec 80C: this section was supposed to be for SAVING/INVESTING. Sadly by including home loan repayment, school fees, etc. the impact of this section has been marginalised. This limit of Rs. 100,000 looks like a joke. For most people it is irrelevant.

c. Capital Gains: The people who were rich or got rich in the stock market boom benefited by not paying any capital gains or tax on dividends. Sure there was STT – but PC will WANT a cut out of these inflation profits – so expect to see cap gains back in a small form. Sure STT will also be there. Dividends will again be taxed – at the maximum marginal rate perhaps.

d. Estate Duty: Charging a tax on the Rich people passing property to their kids is very tempting in a poor country like India. So expect a small token introduction – and a nice jump up soon.

e. Touching the pension funds: The pensions earmarked for government employees – civil servants, defense personnel, railways….etc. is so scary, that the government MAY change the retirement age to say 65 years – thus you start payments later. However the bomb is so damn big that we do not have the guts to see it or touch it.

f. Fibbing about the nos. by window dressing is easy for a wily old Congress Fox. So some of the government nos. will be changed – and the window dressing will be so brilliant that most of us will not know what happened. Be careful.