Post Budget Reactions: Taxation
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Manish Mishra, Executive Director, Khaitan & Co
The Budget presented today seems to be favouring the common man as there were no dramatic changes in tax rates. However, the affluent class will have to pay more taxes for high end automobiles and mobile phone devices. Increase in excise duty on cigarettes and levy of service tax on all air conditioned restaurants would follow this trend. There have also been extensions of custom duty incentives on electric and hybrid vehicles, machinery for leather industry, Maintenance, Repair and Overhauls (MRO) industry in aviation and pre-forms precious and semi-precious stones to boost exports.
Considering the present state of the textile sector, re-introduction of the zero duty regime is welcome.
Although the Budget announcement highlighted the intention to introduce GST law and compensate the states for CST losses through a Rs 9000 crore fund, it is disappointing to see that there was no roadmap and time-frame laid out for implementation of GST.
Rahul Garg, Leader Direct Tax, PwC India
Investment allowance of 15 per cent in respect of investment in plant and machinery of over Rs 100 crore proposed. This investment limit should be reduced to make it applicable to all small businesses. No new material taxes despite challenge of fiscal deficit.
Additional tax burden on domestic unlisted companies in respect of buy-back of shares and corresponding tax exemption in the hands of the shareholders. Tax rate on royalty/technical fee income of non-residents has been increased from 10 to 25 per cent of the gross amount which is harsh on companies in non-tax treaty jurisdictions. Not addressed the concerns of investors in respect of taxation of indirect transfers and certain retroactive amendments.
Punit Shah - Co-Head of Tax, KPMG in India
The proposed change in FDI (more than 10 per cent) and FII regime (less than 10 per cent) will entail detailed examination of all SEBI and FEMA and listing regulations to ensure that it is implemented in an appropriate manner. All these laws will need to be amended to ensure that the spirit of the law is preserved. The impact on the current investments will also have to be carefully considered and will need to be grandfathered.
The tax is proposed to be levied on distribution of income by the Securitasion Trusts. While, it is a welcome move to provide clarity of tax to the investors in the Trust, it will discourage some investors in investing into securitasion activity, if they are paying tax at a rate less than the maximum marginal rate.
Sunil Jain, Partner, J.Sagar Associates
Continuation of tax slabs with specific period surcharge on higher income levels should create least amount of furore in the market. Measures for widening of tax base and anti-avoidance measures will need to be analyzed in detail to assess actual impact.