New Delhi: A simpler tax regime is beneficial to all whereas a difficult rollout can take the sand off your feet. This year’s budget is either make or break situation for the Modi government, according to the Budget 2016 panel on NewsX — consisting of Sanjeev Bhasin ( Executive Vice President Market and Corporate Affairs with IIFL), Vikas Vasal (Partner and National Head with KPMG), V. VaidyaNathan (Chairman& MD of Capital first Ltd), Sunil Aggarwal (Senior taxation Partner at AZB & Partners).
The central government has its task cut out for the indirect taxation matters in the upcoming Union Budget 2016-17. Finance Minister Arun Jaitley may have accorded and maintained “top priority” status for the goods and services tax (GST) but it seems that it is unlikely it will be rolled-out before April 1, 2017.
For the GST bill to be passed, amid the peevish political environment, the Rajya Sabha first has to pass the 122nd Constitution Amendment Bill with a two-third majority. It easier said than done where compliance seems to be a cumbersome process, in view of the upcoming Assembly Elections in four states.
According to the panel discussion that was held at NewsX studio, GST can make India a seamless unified market for GST as well as for the start-ups. The passage of GST is being hampered due to the constant clashes between the Bharatiya Janata Party (BJP) and the Congress.
There have been reports of the ministry of finance and Central Board of Excise and Customs undertaking steps for adaptation and alignment of infrastructure, in preparation for GST which is helpful for Make in India. However, few other measures including model GST laws and related procedures should receive top attention so as to allow time for stake-holders comments, the panel believes.
The Special Investigation Team (SIT) could be modified in Budget, the experts felt.
On the side of direct taxes, a host of amendments that will rejuvenate the law are on the cards, in keeping with the “stability and predictability” philosophy for ease of doing business in India.
The government, buoyed by handsome indirect taxes collections, should consider threshold under central excise and service tax law so that it could align with diverse threshold limits in the various laws, particularly when compared with existing floor rate in state value-added tax (VAT) laws.
Moreover, for exemptions, there is a lot of speculation that excise exemptions will be cut back, more so in products that have been enjoying an exemption under the excise law historically, but have come to be taxed under the state VAT laws.
India Inc believes that corporate exemptions should touch at least 25%.
In the negative list regime of taxation of services, the scheme should be simple and easy to follow which mean “opening up” the scheme and also aligning it with state VAT laws.
Not to forget about the tax charge of Swachh Bharat cess that calls for the revaluation, believes the panel. There is possibility of increase in the general rate of taxation (central excise, service tax), which will be contained as being preparatory for GST – perhaps a sign of the rate in the GST regime.