Business Wire IndiaThis year’s Indian Budget was being dubbed as a ‘Now or Never’ Budget for the NDA Government. While a lot can be passed off as unfulfilled expectations, for once, there was remarkable clarity in the vision of the Government in presenting a Budget that focused primarily on pushing India ahead through a calculated agenda on inclusive growth. Budget proposals are aimed at ‘transforming India’ based on nine pillars, viz, agriculture and farmer welfare; rural sector; social sector; education, skill and job creation; infrastructure and investment; financial sector reforms; governance and ease of doing business; fiscal discipline; and tax reforms.
Mukesh Butani, Managing Partner, BMR Legal said, “It’s a balanced budget with an overarching theme of realizing inclusive and staggered economic growth, without stepping down on the path of fiscal prudence. Amongst positives, focus on infrastructure development, fixing distressed asset concerns of financial sector, employment generation through indigenization stand out. Bankruptcy code and a framework for commercial dispute settlement under PPP framework are the two most significant regulatory reforms rolled out.”
“A lot of other positives – e.g., the Budget buries the bogey of retrospective tax, and provides one time opportunity for settlement of past disputes; implementing outcomes of BEPS in the form of equalization levy cess in B2B digital transactions of 6 percent shall help garner revenues. The Budget rolls out a host of administrative reforms by way of fixing loopholes and measures to improve taxpayers’ experience, and that is definitively a step in the right direction to evolving taxpayers’ service focused administration. Improvised dispute resolution shall encourage settlement of languishing tax disputes and help unclog dispute resolution mechanism. One time window for voluntary disclosure by delinquent taxpayers finds its way back into legislation, and it’s encouraging to see the FM not propose a prohibitive penalty on disclosure," added Mukesh Butani.
The policy proposals in the Budget demonstrate a clear impetus towards Government’s flagship programmes Start up India, Make-in-India, Stand-up India and Swachh Bharat mission, along with extending a helping hand to the priority sectors (such as, rural sector, social sector, infrastructure sector, banking sector) and vulnerable sections of the Indian population. Under the FDI Policy, key change is to allow FDI under automatic approval route upto 49 percent in the Insurance and Pension sector, upto 100 percent in ARCs, upto 100 percent in marketing of Indian food products, and in NBFC activities (other than specified 18 activities) regulated by financial regulators and permitting hybrid instruments subject to conditions. On the direct tax side, the FM reiterated his commitment to implement GAAR from April 1, 2017.
Gokul Chaudhri, Leader, Direct Tax, BMR & Associates LLP said, “The Union Budget is pragmatic and sensible with well-defined objectives. For small tax payers, select measures have ensured lower tax burden. For new manufacturing enterprises an attractive rate of 25 percent corporate tax and for startups a tax holiday for 3 years as promised. The overall rate cut for corporate tax has eluded. There were worries that capital gains and dividend taxation would be adversely impacted. The FM has wisely balanced the provisions by limiting the change only for dividends exceeding Rs 10 Lakh being taxable at a rate of 10 percent in hands of shareholders. In a way, well off shareholders will have dividends at an effective cost of 30 percent.”
“The macro-economic stability has been reassured with fiscal deficit sensibly in control and quality spending on roads, rail and public infrastructure. The PPP model is being revived with new legislative measures and the nation was assured that ease in business continues with the proposed changes in tax and corporate laws," added Gokul Chaudhri.
Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP said, “Budget announcements seem well directed with focus on rural economy, infrastructure spending, social welfare schemes and ‘digital’ initiatives. Rationalization of indirect tax and duty structures for various sectors such as IT hardware, defence, mineral and petrochemical, aviation to name a few, with a view to encouraging Make in India initiative is a welcome move. Overall, coverage of various sectors of the economy was comprehensive with focus on keeping the Government spending within acceptable limits of fiscal prudence."
"While no firm commitment on Goods and Services Tax (GST) timelines was made, the industry expectation was to align existing central indirect tax regime with the proposed GST framework. Withdrawal of miscellaneous cesses and rationalization of CENVAT credit mechanism appear to be small steps in this direction. However, introduction of new cesses in addition to those introduced in the previous year, run contrary to that expectation and appears regressive,” added Rajeev Dimri.
In summary, while tax experts mull over the fine print of the Budget to identify nuances, Budget 2016 marks a pragmatic attempt by the NDA Government to solidify India’s emergence in the global context making India increasingly relevant for international businesses, and to alongside push the agenda for a holistic and inclusive improvement in the socio-economic variables.
About BMR Advisors
BMR Advisors is a professional services firm offering a range of Tax, Risk and M&A advisory services for domestic and global businesses of all sizes. The firm enhances value for clients by focusing on solutions that are innovative, yet practical and that can be implemented. This is achieved by blending domain expertise with analytical rigour, while maintaining an uncompromising focus on quality, and by hiring and nurturing high quality professionals with a passion for excellence. BMR is committed to making a difference to clients and to its people, and delivers this through the integrity of its effort and by living its core values. Founded on October 1, 2004, the firm has won the confidence of several Fortune 500 companies and is the partner of choice for their advisory services. The respect that the firm commands is evident from the fact that it is consistently rated amongst the top tax and M&A brands in India. A team of over 600 professionals has extensive functional and industry expertise across service areas, and is well-equipped to deliver world-class services to our clients. For additional information, visit www.bmradvisors.com.
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Mukesh Butani, Managing Partner, BMR Legal said, “It’s a balanced budget with an overarching theme of realizing inclusive and staggered economic growth, without stepping down on the path of fiscal prudence. Amongst positives, focus on infrastructure development, fixing distressed asset concerns of financial sector, employment generation through indigenization stand out. Bankruptcy code and a framework for commercial dispute settlement under PPP framework are the two most significant regulatory reforms rolled out.”
“A lot of other positives – e.g., the Budget buries the bogey of retrospective tax, and provides one time opportunity for settlement of past disputes; implementing outcomes of BEPS in the form of equalization levy cess in B2B digital transactions of 6 percent shall help garner revenues. The Budget rolls out a host of administrative reforms by way of fixing loopholes and measures to improve taxpayers’ experience, and that is definitively a step in the right direction to evolving taxpayers’ service focused administration. Improvised dispute resolution shall encourage settlement of languishing tax disputes and help unclog dispute resolution mechanism. One time window for voluntary disclosure by delinquent taxpayers finds its way back into legislation, and it’s encouraging to see the FM not propose a prohibitive penalty on disclosure," added Mukesh Butani.
The policy proposals in the Budget demonstrate a clear impetus towards Government’s flagship programmes Start up India, Make-in-India, Stand-up India and Swachh Bharat mission, along with extending a helping hand to the priority sectors (such as, rural sector, social sector, infrastructure sector, banking sector) and vulnerable sections of the Indian population. Under the FDI Policy, key change is to allow FDI under automatic approval route upto 49 percent in the Insurance and Pension sector, upto 100 percent in ARCs, upto 100 percent in marketing of Indian food products, and in NBFC activities (other than specified 18 activities) regulated by financial regulators and permitting hybrid instruments subject to conditions. On the direct tax side, the FM reiterated his commitment to implement GAAR from April 1, 2017.
Gokul Chaudhri, Leader, Direct Tax, BMR & Associates LLP said, “The Union Budget is pragmatic and sensible with well-defined objectives. For small tax payers, select measures have ensured lower tax burden. For new manufacturing enterprises an attractive rate of 25 percent corporate tax and for startups a tax holiday for 3 years as promised. The overall rate cut for corporate tax has eluded. There were worries that capital gains and dividend taxation would be adversely impacted. The FM has wisely balanced the provisions by limiting the change only for dividends exceeding Rs 10 Lakh being taxable at a rate of 10 percent in hands of shareholders. In a way, well off shareholders will have dividends at an effective cost of 30 percent.”
“The macro-economic stability has been reassured with fiscal deficit sensibly in control and quality spending on roads, rail and public infrastructure. The PPP model is being revived with new legislative measures and the nation was assured that ease in business continues with the proposed changes in tax and corporate laws," added Gokul Chaudhri.
Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP said, “Budget announcements seem well directed with focus on rural economy, infrastructure spending, social welfare schemes and ‘digital’ initiatives. Rationalization of indirect tax and duty structures for various sectors such as IT hardware, defence, mineral and petrochemical, aviation to name a few, with a view to encouraging Make in India initiative is a welcome move. Overall, coverage of various sectors of the economy was comprehensive with focus on keeping the Government spending within acceptable limits of fiscal prudence."
"While no firm commitment on Goods and Services Tax (GST) timelines was made, the industry expectation was to align existing central indirect tax regime with the proposed GST framework. Withdrawal of miscellaneous cesses and rationalization of CENVAT credit mechanism appear to be small steps in this direction. However, introduction of new cesses in addition to those introduced in the previous year, run contrary to that expectation and appears regressive,” added Rajeev Dimri.
In summary, while tax experts mull over the fine print of the Budget to identify nuances, Budget 2016 marks a pragmatic attempt by the NDA Government to solidify India’s emergence in the global context making India increasingly relevant for international businesses, and to alongside push the agenda for a holistic and inclusive improvement in the socio-economic variables.
About BMR Advisors
BMR Advisors is a professional services firm offering a range of Tax, Risk and M&A advisory services for domestic and global businesses of all sizes. The firm enhances value for clients by focusing on solutions that are innovative, yet practical and that can be implemented. This is achieved by blending domain expertise with analytical rigour, while maintaining an uncompromising focus on quality, and by hiring and nurturing high quality professionals with a passion for excellence. BMR is committed to making a difference to clients and to its people, and delivers this through the integrity of its effort and by living its core values. Founded on October 1, 2004, the firm has won the confidence of several Fortune 500 companies and is the partner of choice for their advisory services. The respect that the firm commands is evident from the fact that it is consistently rated amongst the top tax and M&A brands in India. A team of over 600 professionals has extensive functional and industry expertise across service areas, and is well-equipped to deliver world-class services to our clients. For additional information, visit www.bmradvisors.com.
Connect with us on LinkedIn, Twitter, Facebook, YouTube for the latest updates.
Following are few of the key highlights of the Budget announcement for IFSC:
