Union Budget 2016-17: Hello Mr FM
All eyes are on the Narendra Modi Government as it is scheduled to unveil its first full-fledged budget in Parliament on February 29. The expectations of Indian industry are running high amid the anticipation of big bang reforms which will give a fillip to the manufacturing sector and allow entrepreneurs to do business more smoothly.
There are huge expectations from the government, as already the international markets are keeping Indian economy on edges. Thus all eyes are set on the budget which can bring some shine back on the Dalal street.
One of the major expectation of the industry is smoothening of administrative procedures around refund claims and valuations which are plagued with inordinate delays in assessments coupled with huge revenue deposits which result in uncertainty and blockage of working capital for companies. The Government should focus on these aspects. This will give boost to start-up India initiative as due to delays in these procedure many start-ups die an untimetly death. Reduction in Corporate Tax is expected to promote the business environment as it is unfavourable as compared to other emerging economies.
Considering the increase in cost of living, we may expect rise in the current basic exemption limit of 2.5 lakh to Rs. 3 lakh. Government is looking for innovative approaches for creating more incentives in investing in long term equity markets. We believe the consequent revival in economic activity will further bolster India’s position as one of the fastest growing economies in the world.
Demands such as lowering of securities transaction tax (STT) or removal of dividend distribution tax might also remain unmet. Strained tax receipts given the general economic slowdown, implementation of the seventh pay commission, need to boost the rural economy after two years of subnormal monsoon and necessity of infrastructure and social investments place increased demands on the expenditure side. Thus, the Union Budget 2016-17 has an important task to keep up the positive economic outlook of India by bringing in major indirect tax reforms and addressing business concerns. In addition, the passing of Constitutional Amendment Bill for GST in this budget session, will not only help the Government to set up a positive environment but also will be a giant step towards reinforcing the perception about India as the next investment destination.
*The Writer is Founder & CEO, CapitalVia Global Research Ltd.