The Union Budget 2017, to be tabled in the parliament on Wednesday, February 1, is historic and unique. From the advancement of the date of presentation of the budget by an entire month to the addition of the Railways budget, the budget is expected to be a make or break situation for the Narendra Modi-led government at the centre as it comes on the backdrop of a controversial demonetisation drive. Among other significant topics, the Goods and Service Taxes Bill, passed earlier this year is also expected to be one of the focal points of this budget. The Indian economy, which had just been stabilised after a year of turmoil faced a downfall following the shocking announcement of demonetisation. The government since then has been speaking about the narrative of short term pains for long term gains and would look to restore the economy on the right trajectory as the opposition has left no stone in voicing out loud, the long-term effects of demonetisation.
The turmoil that began on the night of November 8, 2016, has also braked the implementation of certain other projects of the government, which had earlier had the support from the opposition. One such project is the much-anticipated Goods and Service Tax Bill, which is said to be the largest economic reform in the country since 1991. Hence, considering the fact that the government has been running on a path of thorns, it is quite expected that the government would churn out a few “populist” investments in the Budget 2017.
A proper plan for the implementation of the GST is expected to be put in place. The bill has been stuck in the arguments among the states and the centre for a few months now. While the questions about sharing of taxes between both the parties seem to be clearing, the Modi-government will be expected to have the bill legislated and provide some definitive steps for already delayed September implementation. On of the major concerns remains that the there has been no proper mechanism put in place for the exclusion of the value of land for the purpose of determination of taxable value.
According to the Economic Survey 2017, the Goods and Services Tax would create a common Indian market, improve tax compliance and governance and boost investment and growth. Moreover, it will also complement the demonetisation process, according to the Economic Survey 2016-17. The Survey hails GST and Demonetisation as “two major domestic policy developments” of last year. It also says that GST is a “bold new experiment in the governance of India’s cooperative federalism.” Although the GST bill has, to an extent addressed certain issues regarding the taxation of various supplies, the real estate sector seems to have missed the GST council’s thoughts.