Scheduled to be presented in the Indian Parliament on 1st Feb, the Union Budget 2018 holds the highest criticality for India, Indians and world economy as a whole. This is the time of Great expectations from Mr. Arun Jaitley writes Faiz Askari.
Now, when we say, India we meant from a background of last few years which witnessed craftsmanship of policymaking for better infrastructure, redefined systems and processes. In last few years India has gone under major surgeries such demonetization, GST implementation and several flagship schemes such as ‘Make in India’, ‘Digital India’, ‘Swwach Bharat Abhiyan’ etc. all are crafted to ensure new systems in India which will or which should ultimately bring a positive change. This year’s Budget document is expected to show us measurable success metrics.
The criticality of this Union Budget for Indians can be understood by the fact that it is a budget which is getting shared ahead of General Elections 2019. So, again a common man is in the mainframe and most importantly, last few years have gone in receiving many speeches, announcements, and scheme rollouts from the perspective of the betterment of common man, now the results of all these activities are getting expected. And, lastly, this document is likely to be critically watched and observed by the entire world because of the evolving positioning of India in the global socio-economic scenario.
Blunt Demands from Union Budget 2018
India’s foreign policy has experienced a changed, so as other major countries such as United States, China, and even Pakistan have shown some significant changes in their outlook towards India. This Union Budget is expected to sketch out a game plan to make India’s position even stronger at the global level.
So, Indians and Indian entrepreneurs have some great expectations from Mr. Arun Jaitley to showcase results as well as attract masses to move ahead.
Economists, entrepreneurs are optimistic about India’s growth trajectory and it is obvious to mention that a tax rate cut is desperately expected. Reforms are most welcome but what is needed to have implementation strategy which can be more easy to introduce reforms into the system.
Therefore, even if fiscal prudence is exercised in this Budget, it will be important for the government to take into consideration the building expectations of the public. It is certain that it will continue to push forward its growth manifesto and make announcements on key aspects, such as attracting foreign investment, ease of doing business, employment generation, digitization and financial sector reforms. Clearly, with so many objectives to meet, the Honourable Finance Minister will be aiming for the bullseye to ensure that the key issues of various stakeholders are addressed once and for all!
Abhishek Goenka, Partner, and Leader, Corporate and International Tax at Pricewaterhouse Coopers India made few key demands ahead of Union Budget speech from Mr. Arun Jaitley. He says,“Reduction in the rate of corporate tax in line with the plan to bring it to 25% must be considered by Mr. Jaitley. In addition, simultaneous rationalization of the rates of dividend distribution tax and minimum alternate tax is also needed. This Budget should bring rationalization of the interest deduction limitation provisions by excluding interest paid to unrelated parties.” And most importantly, Goenka also pointed out demand for an exemption from MAT for companies on gains from the sale of shares on the stock exchange and removal of the “angel tax” provisions for investments in start-ups.
Now, coming on to the key reforms which can surely transform the industrial sector for next one year, Bimal Tanna Partner and Leader, Industrial Products at PWC India listed out following points as –demands which can surely transform the economy. Bimal said, “Reduction in the overall corporate tax rate to 25% for all companies, in line with the commitment made by the Finance Minister in need of the hour. The industry also wants clarity on GST implications of various sales promotion schemes. For companies referred to NCLT under the Insolvency and Bankruptcy code: Waiver of outstanding loan and interest thereon should not be taxed under MAT and normal provisions.”
In terms of motivating investments, the finance minister, Mr. Jaitley, must restore the investment allowance under section 32AC and higher depreciation for plant and machinery from 15% to 25% to provide a boost for investment in manufacturing industries. “Restoring the highest rate of depreciation instead of present 40% to provide impetus to industries using energy saving equipment which is efficient in curbing the pollution,” Bimal quoted, “Allow the carry forward of unutilised R&D deduction under section 35 (2AB) benefit for an indefinite period (on the lines of unabsorbed depreciation).”