Experts have termed tax proposals in the Budget as a mixed bag without major surprises as most key measures were on expected lines. However, they expressed doubts about government collecting the targeted higher indirect tax mop-up at Rs 20,600 crore, saying in the past too this was not achieved.
As per Khaitan & Co’s Dinesh Agrawal, the government’s plan to mop-up additional revenue from indirect tax may not materialise, especially from jewellery and garments sectors. Budget 2016-17 has increased excise duty on jewellery and branded garments by 1 per cent and 2 per cent, respectively.
But past efforts to levy duty on these goods did not succeed, he noted. Excise duty on tobacco, SUVs and luxury cars above Rs 10 lakh have also gone up. Describing the Budget as an incremental move in the backdrop of increased global uncertainty, Girish Vanvari of KPMG India said while there is nothing new on the taxation front in general, Finance Minister Arun Jaitley could have done more.
“No change in capital gains tax for listed stocks is a positive for the stock markets. However, the additional tax of 10 per cent on dividends in excess of Rs 10 lakh and increase in stock transaction tax on options is a dampener for the markets,” Vanvari said in a note. “All in all, in the backdrop of the prevailing global scenario, the Budget is a good pragmatic balancing act on the taxation side,” he added.
On the agriculture front, Director Agri & Natural Resources PwC Ajay Kakra says the budget provides a good start by announcing structural reforms in the Irrigation and crop insurance segment thereby demonstrating the long term commitment of the government towards the Agricultural sector. “Further initiatives such as value chain development is an initiative towards market development of agricultural commodities. The step has long term ramification especially for small and marginal farmer however, the government also needs to undertake market development activities for organic agricultural produce,” said Kakra.
Kakra feels that the Union Budget had a clear focus on agricultural sector. “The creation of unified National Agricultural Market (NAM) and initialization of nationwide e-trading platform will be helpful in removing regional disparities existing across the markets in India and bring together the buyers and sellers on a single platform. Further, initiative to increase transparency through online procurement system for Food Corporation of India (FCI) will ease the procurement for majority of farmers from whom the foodgrains are procured,” added Kakra.
On the proposals to end tax litigations, Sanjay Sanghvi of Khaitan & Co said, “Overall a good Budget, in line with the focus of the government on ‘Make in India’, promoting growth and reducing tax litigation and compliance burden.” On plans to grant stay to taxpayers on payment of 15 per cent of the disputed tax demand pending disposal of appeal, he said, “This will go a long way in avoiding harassment of taxpayers. The plan to address the domestic black money issue is another significant tax proposal.”
(With PTI inputs)