कोशपूर्वा: सर्वारम्भा II
The launching of all programs depend first and foremost on the resources of the treasury. (Arthashastra, Kautilya)
Therefore, for a robust economy, a progressive budget is an imperative. The countdown for the budget has begun. The Indian economy had a consistent downward slide, almost in all the sectors, plagued by hopelessness and disappointment. The Nation suffered from a policy paralysis. With a majority government the hopes are high, expectations astronomical. This budget has garnered more attention that the FIFA World Cup, and it has every reason to do so. The Finance Minister has a daunting task to revive the Economy, check the inflation, boost the growth rate and at the same time providing respite to the common man. Without delving too much in depths and technicalities, my expectations from the budget can be summed up as under:
1. The Defense Sector:
कोशद्वणड: प्रजायते II
From the strength of the treasury the army is born (Arthashastra)
Interesting neighbours, obsessed with militia, volatile and vulnerable, surround India. The Government’s invitation to the SAARC Nations for the Prime Minister’s Swearing In ceremony has been considered as a masterstroke by many experts. Even though the relations will get better, it is important that the amount spent on Defense is prudent and considerate. The FDI in Defense will brew up a storm but considering the fact that India has been importing arsenal, it seems as a prudent step. FDI in Defense till a certain percentage will boost up the domestic industry in terms of know how and availability. India can also emerge as a future supplier for arsenal to the other countries. There can be a 30-40% of FDI in this sector.
In the last two decades or so, the contribution of Agriculture in India’s GDP has decreased massively. Although, the share in GDP has gone down, interestingly 60% of the population is still dependent on Agriculture for survival. All the past governments have talked about the BPL, Farmer Suicide etc. but no concrete steps have ever been taken in this direction. With the forecast of a weak monsoon, it is imperative that this budget has pro farmer proposals. Providing subsidy on diesel to farmers, fixing MSP, micro finance are some of the important areas to cater. The Government should take steps in making technology and Research available to the farmers.
3. Roll back of Retrospective Amendments
राजा धर्मेण कुर्वित धनसंचयमेकत: I
Even Chanakya had written that the Ruler must collect taxes through just means. It is time that the Government must rollback all the retrospective amendments with retrospective effect. It had become a tradition to bring in an amendment when, even the Honorable Supreme Court had decided the point of law. Such amendments are ridiculous, authoritative and draconian in nature. They spread uneasiness and distrust amongst the industry players. The Vodafone case is a leading example, which has done enough to bring disrepute and a tag of Banana Republic to a country that gave world the economic policies much before Machiavelli.
4. The Government should come up with a definitive road map with clearly defined time lines for the implementation of GST.
5. Proposals for Income Tax
a. The basic exemption in the slab rate should be increased from 2 Lac to 5 Lac. The Honorable Finance Minister, in one of his deliberations, has promised this. However, the introduction seems highly improbable in this budget.
b. AIR for credit card usage should be increased to 5 Lac. Currently, the Credit Card companies have to file an Annual Information Return with the department for all credit card users spending more than 2 Lac a year. It is time that the parameters are revised not only for this but all the other conditions where AIR has to be filed. Considering the youth taking up service sector as the choice of employment and making the e-commerce available in the utility bills, the revision is necessary.
c. Revising the draconian and absurd section 14A of the Income Tax Act, 1961. As per the existing provision the AO calculates the disallowance of expense as per the formula laid down in Rule 8. The brunt however has to be faced by the Taxpayer as for an income of Rs.50,000, an expense of Rs.3,00,000 can be disallowed.
d. Section 234 E should be done away with. This is one of the most irrational and regressive sections of the Income Tax Act, 1961. The assessee is providing a service of collecting the tax from the tax payer, on behalf of the Government and depositing it to the treasury. It is an honorary service. Instead of being rewarded for the partnership, there is a penalty of Rs.200 per day over and above the interest for late payment or deduction. Not only the provision lacks rationale, it is barbaric and autocratic.
e. The Finance Minister must raise the deductions allowed under section 80C to Rs.2,00,000 and encourage the tax payers to save more. The medical reimbursement should be increased to at least Rs.75,000.
This Government has a mandate, a mandate for reforms, creation of opportunities and employment. There are sectors like Retail, Airlines, power and steel reeling under the pressure. The business world is waiting in anticipation. The common man is waiting in hope and we, the professionals are keeping the faith. This Budget can be a second wind of revival and resurrection of the Economy, equal to the historical 1991 budget. The wait is not that long to see if this budget will prove the ‘bitter pill’ and cure the ailing economy or it’ll leave a bitter indelible after-taste like its political predecessor. To conclude with the words of the great Nani A. Palkhivala “To tax and to please is not given to men; but to tax and be fair is."