ALL EYES ARE SET ON
THE UNION BUDGET
My Beloved Members,
The exercise of framing Union Budget by Hon’ble FM, Mr. Arun Jaitley under the supervision of the Prime Minister Mr. Narendra Modi has already commenced. This being the first budget of both, the expectations of all quarters are running very high!
The Prime Minister already met on the eve of first meeting of “Niti Aayog” and sought views from experts to find ways to boost economy as Government has set its full-fledged machinery for the preparation of budget. The meeting was attended by Finance Minister, Arun Jaitley and experts such as Mukesh Butani, Nitin Desai, Partha Sarathi Shome, Rajiv Lall, Swaminathan Aiyer, Vijay Kelkar, V. Reddy, among others. In this connection, it may be recalled that the Government set-up the ‘National Institute for Transforming India (NITI)’ by replacing Soviet-era Planning Commission on January 1. The Government earlier said that the said meeting was called for “interaction on the subject of the State of Economy and for inviting suggestions on the forthcoming Union Budget.”
Following is a ‘Wish List’ submitted by investors, common man and trade and industry bodies as well as the outline feedback given by the Finance Minister:
• Fiscal discipline : The Finance Minister is expected to stick to the fiscal consolidation path, with the deficit target for 2015-16 and 2016-17 at 3.6% and 3% of GDP, respectively.
• Subsidy reforms : Investors hope the budget will follow-up on reforms for other subsidised fuels, trim spending on food and fertilizer subsidies.
• Welfare reforms : The budget is expected to streamline flagship welfare schemes like the National Rural Employment Guarantee Act.
• Capital Spending : Jaitley is expected to create fiscal space to spend as much as $ 50 billion next fiscal on new roads, new rail lines, ports and irrigation facilities.
• Manufacturing : The budget is expected to give a big push to Modi’s ‘Make in India’ campaign, with tax breaks and other incentives for several sectors.
• Goods and Services Tax : Its passage depends on whether the FM can honour his promise to compensate States for potential revenue losses. The budget is expected to detail the promised compensation package which may be incorporated in the Finance Bill.
• GAAR : Investors are seeking a new timeline for the implementation of General Anti- Avoidance Rules, (GAAR), aimed at Companies and investors routing money through tax havens.
• Banking reforms : FM is expected to offer a road map to improve the health of ailing public sector banks, which have been hobbled by non-performing assets and corporate governance issues.
• Substantial increase in Section 80-C investments : RBI Governor has expressed deep concern over the domestic saving rate going down to 30% which was 36.9% in the F.Y. 2007-08. He has therefore himself recommended to the government to increase substantially 80C investment limit from the present one at Rs. 1.5 Lakh, since the earlier limit of Rs. 1 Lakh was stationary for number of years. As a result, the saving rate on a National level has greatly reduced which is required to be greatly enhanced right now.
• Seeking tax sops : The telecom Dept. also wants the government to increase tax depreciation rate from 15% to 65% on batteries used by telecom infrastructure service company. Many recommendations in its earlier list, did not find their way in this behalf.
AG ADVISES CENTRE TO ACCEPT BOMBAY HIGH COURT RULING
Attorney General Mr. Mukul Rohatagi has advised the Govt. to accept the orders of the Courts and Tribunals that have decided in favour of a taxpayer. On consideration of this advice the Centre accepted the decision and Bombay High Court judgment will be accepted so as to ensure stability and predictability in tax matters are important for long-term investors such as Vodafone. Several multinationals such as Shell and Nokia have complained of getting an unfair deal. The Dutch Oil Major won a similar transfer pricing case in the Bombay High Court. Therefore, CBDT Chief as well as Rohatgi’s views prevailed in the matter and the Government accepted their views, thereby a kind of signal has been given, Namely, where the IT liability is clear and unambiguous, it shall only be charge. Where it is over stretched without legal authority, the Govt. will be fair. Thus, it is now clear that income tax laws will be quite fair to foreign companies doing business in India.
Coming back to the working of the Association, members are aware of the National Tax Conference scheduled to be held on 18th and 19th April, 2015 at Darjeeling, a lovely place famous for watching early sunrise at Tiger Hill. The program and other details have been printed in AIFTP Times for February 2015. I take this opportunity and appeal to our members to attend the same in large numbers. Additionally, I request our brothers to make all efforts to enrol new members on this occasion.With best wishes and regards,