In the midst of the global slowdown and turbulence coupled with the beaten-up financial markets, the Finance Minister has been able to present a pragmatic and well balanced budget rightly focusing on core sectors. Choosing to stick with FRBM target of 3.5% fiscal deficit is laudable. It was comforting to observe no change in two most discussed issues during pre-budget week, tinkering of capital gain tax regime and increase in the service tax rate. Budget has proposed noteworthy steps for reducing tax litigation and promoting affordable housing. This budget is rightly an onset to the long term expedition for a pensioned society and use of technology for interface between tax department and tax payer.
As expected, the budget provides fillip to the start-ups be introduction of tax holidays. Deferral of POEM by a year a welcome move, but it would have been constructive if the deferral was till April 2017. However, on reduction in the corporate tax rate, much was expected than what is done. No mention on GST roadmap and completely missing the disinvestment targets were big dampener. Bringing dividend to tax in the hands of recipient, though only for super rich, would result in double taxation of the same income. Plethora of cesses would further complicate the intricate tax structure.Urban middle class, which had maximum contributed to the GDP growth, does not seem to be benefited much from the budget. To summarize, amidst huge industry expectation, the Budget on one hand deserves lot of applause but at the same time fails on certain expected parameters. Now, the focus shifts on implementation.
Source: Mr. Divyang Thakker
Vice President-Direct Taxes, Reliance Communications Limited
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