The year 2017 will go down as another stellar year for India, with milestones such as introduction of GST, strong economic outlook, unprecedented improvement in ease of doing business rankings, stock markets reaching new heights with reduced dependencies on the FIIs among others, to look back on. But come 1 February, the spotlight rolls back on to the FM to showcase what he has in his kitty for the next fiscal.
Considering that any goodies in the pre-election budget could come within the realm of Election Commission's scrutiny, Budget 2018 could well be NDA's last chance at 'Acche Din'.
With the US tax overhaul and the trend of reducing corporate tax rates globally, pressure would be mounting on the FM to keep up with the earlier promise to reduce the corporate tax rate to 25%. There is also a need to rationalize surcharges and cess, which may further reduce the tax burden of corporates. Recent initiatives such as Income Computation and Disclosure Standards seem to have added to the confusion, working against their proposed objective of reducing uncertainty and litigation and scrapping them entirely would be a welcome move for corporates.
Dividend Distribution Tax (DDT) levied on corporates has become burdensome and is often touted as an inefficient levy increasing the effective corporate tax rate in absence of matching credits to the shareholders. Rationalizing DDT either by abolishing it or by making suitable amendments to make it "efficient" would be a welcome move. Being often criticized for not creating enough job opportunities, the FM last year opened the Income-tax incentive for hiring additional workforce to service sector, but with a salary threshold of Rs 25,000 per month. There is a case to increase this threshold as also tax allowances associated with investments and the position on mandatory CSR expense for the corporates.
Moving to personal taxation, rejig of the existing tax slabs and increase in section 80C limit is highly anticipated, considering the expansion of the taxpayer base due to demonetisation. Aligning the exemption limits for other allowances with the current cost of living is again overdue. While the RBI has clarified that crypto currencies are not considered as a legal tender, clarifications on tax aspects would be helpful.
With markets reaching an all-time high, the FM may want to act guarded against bringing back long-term capital gain (LTCG) on sale of shares.
After having successfully turned around the country's biggest tax reform till date in the form of GST and also setup of a task force charged with the overhaul of India's direct tax laws, has kept India Inc invested with the hope of simplification of direct tax laws.
Preparing the budget, however, is far easier said than done as it is impacted by various micro and macro factors not easily identifiable in the short term. It would be interesting to see whether, in the fourth inning for the current government, the FM plays for a win with goodies for the masses by raising non-tax revenue given the dip in GST collection lately or whether he plays for a draw by strictly following the path of fiscal discipline.
Until then, keep calm and look forward .. "Achche Din"
Considering that any goodies in the pre-election budget could come within the realm of Election Commission's scrutiny, Budget 2018 could well be NDA's last chance at 'Acche Din'.
With the US tax overhaul and the trend of reducing corporate tax rates globally, pressure would be mounting on the FM to keep up with the earlier promise to reduce the corporate tax rate to 25%. There is also a need to rationalize surcharges and cess, which may further reduce the tax burden of corporates. Recent initiatives such as Income Computation and Disclosure Standards seem to have added to the confusion, working against their proposed objective of reducing uncertainty and litigation and scrapping them entirely would be a welcome move for corporates.
Dividend Distribution Tax (DDT) levied on corporates has become burdensome and is often touted as an inefficient levy increasing the effective corporate tax rate in absence of matching credits to the shareholders. Rationalizing DDT either by abolishing it or by making suitable amendments to make it "efficient" would be a welcome move. Being often criticized for not creating enough job opportunities, the FM last year opened the Income-tax incentive for hiring additional workforce to service sector, but with a salary threshold of Rs 25,000 per month. There is a case to increase this threshold as also tax allowances associated with investments and the position on mandatory CSR expense for the corporates.
Moving to personal taxation, rejig of the existing tax slabs and increase in section 80C limit is highly anticipated, considering the expansion of the taxpayer base due to demonetisation. Aligning the exemption limits for other allowances with the current cost of living is again overdue. While the RBI has clarified that crypto currencies are not considered as a legal tender, clarifications on tax aspects would be helpful.
With markets reaching an all-time high, the FM may want to act guarded against bringing back long-term capital gain (LTCG) on sale of shares.
After having successfully turned around the country's biggest tax reform till date in the form of GST and also setup of a task force charged with the overhaul of India's direct tax laws, has kept India Inc invested with the hope of simplification of direct tax laws.
Preparing the budget, however, is far easier said than done as it is impacted by various micro and macro factors not easily identifiable in the short term. It would be interesting to see whether, in the fourth inning for the current government, the FM plays for a win with goodies for the masses by raising non-tax revenue given the dip in GST collection lately or whether he plays for a draw by strictly following the path of fiscal discipline.
Until then, keep calm and look forward .. "Achche Din"
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