Finance Minister Arun Jaitley will present the Union Budget for 2015-16 on February 28. On #IndiaHangOut, our panel of experts, including Taxsutra, discuss the expectations from a tax point of view.
“This is going to be a big budget from a business and commerce stand-point. It’s going to determine the direction that the government wants to set for its reform programmes. But don’t expect too many legislative changes,” said Mukesh Butani, Managing Partner of BMR Legal.
Dinesh Kanabar, the CEO of Dhruva Advisors LLP, asserted that this will be an important budget for the new Modi government. “The government needs to walk that talk on tax terrorism. What is really needed is the revival of the investment cycle and all the things that are attached to it. I do believe the budget will signal some big-ticket changes,” he said.
The Make in India Vision
"I don't think there is any scope for excise duty cuts in the current scenario. Make in India needs inputs in the form of infrastructure and finances. When it comes to tax, at the most, they could give some additional sops," said Gautam Doshi, the Group Managing Director of Relaince ADAG.
Butani agreed with Doshi, stressing that the 'Make in India' programme is a larger government vision, personifying innovation and quality. "The Make in India vision is expected to be realised through a number of fiscal and non-fiscal incentives. Non-fiscal changes would include a directional change in our trade policy. I don't see any tax legislative change to promote the government's vision. I don't think the government will make any discrimination between and small and large enterprises," he said.
Will the Goods and Services Tax (GST) take off?
"The Constitution Amendment Bill has to pass through both Houses of the Parliament. After that, one-half of the state legislatures has to ratify it. The problem is more political right now. The opposition is using GST as a big leveraging tool," explained Arun Giri, the Editor of Taxsutra.
"The technical hurdles holding up GST are that there is still no clarity on the set-up for existing taxes, till what extent would it be effective and how will exemptions work in the case of GST. The government has not given any real thought towards it. You need at least six months advance notice to implement a law like GST," Doshi said.
Tax Dispute Resolution: Will the FM usher in Certainty?
"I think the start has already happened. If you look at the last six months, few actions have already been taken. A set of administrative circulars that have been issued in the context of tax holidays to SEZs. The second important landmark was the government's decision to not appeal against certain cases. The tax dispute resolution mechanism requires more of administrative changes that any legislative ones," Butani said.
"UK, for example, has very recently introduced a tax dispute resolution mechanism, where a team of commissioners sits with you; agrees to something and then that goes to an independent committee. India can learn from this and implement a similar mechanism to sit and solve disputes rather than get into a long litigation," Kanabar said.
"There is a very strong commitment to tax reforms to ease the pain of business. I think I expect a bold statement from the Finance Minister in the Union Budget. We all within the tax fraternity believe that there is a lot of effort that has gone into the Tax Administrative Reforms Commission (TARC). The last report was submitted to the government three days back and they need to give a serious look at these recommendations," Butani concluded.