Pragmatic, policy directional and balanced - this is my understanding for Union Budget 2015/16 . Proposals such as abolishment of wealth tax, rationalisation of corporate tax structure, removing uncertainty over DTC, with clear roadmap for financial discipline and consolidation are the need of the hour.
This Budget has been presented when the Indian economy has embarked upon a high growth trajectory and the global economy is facing a downturn.
With GDP growth expected to be 7.4 per cent, inflation in terms of WPI touching negative level, CAD (current account deficit) moving towards less than 1.3 per cent of GDP and maintaining budgeted fiscal deficit of 4.1 per cent of GDP in 2014/15, the Indian economy is expected to achieve dream double-digit growth in near future.
The Union Budget used tax as an instrument to achieve 'minimum government and maximum governance', and introduced a series of measures, including simplification of tax procedures.
On the direct taxes front, increase in monetary limit by Rs 10 lakh for a case to be heard by a single member bench of ITAT (Income Tax Apellate Tribunal) will declog cases pending before the Tribunal.
Abolition of wealth tax is a welcome measure. Increase in domestic transfer pricing threshold limit would reduce compliance burden and would also considerably reduce the administrative hassles of the small taxpayers.
The ambiguities in the provisions relating to indirect transfers have been suitably addressed in this Union Budget to eliminate scope for discretionary exercise of power.
The clarification that the presence of fund manager in India would not constitute Permanent Establishment (PE) would encourage offshore fund managers to relocate to India, without fear of any adverse tax consequences.
Also, the steep reduction in the rate of income tax on royalty and fees for technical services from 25 per cent to 10 per cent would have the positive effect of promoting inflow of technology to small businesses at low costs.
Reassurance that the government would avoid resorting to such provisions would surely boost investor confidence.
As regards indirect taxes, the facility of providing online central excise and service tax registration within two working days will promote ease of doing business.
Further, allowing central excise and service tax assessees to issue digitally signed invoices and maintain electronic records will significantly reduce paperwork and red tape.
Being a profession directly connected with tax payers, I strongly feel both these steps will revolutionise the tax administration. Stringent penal and prosecution provisions are in the right direction to deal with black money and its concealment effectively and forcefully.
A series of steps were taken to attract domestic and foreign capital for creating jobs by reviving growth and investment, and promoting domestic manufacturing as part of the government's 'Make in India' campaign.
The most significant one is the deferral of the applicability of General Anti-Avoidance Rules (GAAR) by two years. To clarify that even when implemented, the same would apply prospectively to investments made on or after April 1, 2017 reflects intentions of a predictive tax regime.
This Budget is undoubtedly a sure step to boost investor confidence.
(The author is President, The Institute of Chartered Accountants of India)