Budget 2018: Even as the date for Union Budget 2018 nears, and the government looks to augment tax revenues by widening the tax base, a pertinent question to be asked is whether FM Arun Jaitley look to bring agriculture income under the tax net? We take a look at what top fund managers have to say.
Budget 2018: Even as the date for Union Budget 2018 nears, and the government looks to augment tax revenues by widening the tax base, a pertinent question to be asked is whether FM Arun Jaitley look to bring agriculture income under the tax net? “Prima facie, philosophically it is a great idea, but it is all about the timing. Would the government want to go ahead and impose this levy in a pre-election year? In addition, there are sensitivities of farmers also involved,” Abhay Laijawala, Head – India Research, Deutsche Equities said in an interview to CNBC TV18.
The expert pointed out that there has been a lot of distress in the agriculture space, leaving little room for Finance Minister Arun Jaitley to bring agriculture income under the tax net in the upcoming Union Budget 2018. “Clearly over the last three years we have seen acute rural distress and if the government goes ahead and instead of resolving this distress is seen imposing a tax on agriculture, politically there would be a very low political threshold for the same,” Abhay Laijawala told the channel.
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Sajjid Chinoy, Chief India Economist, JP Morgan says that the agriculture space has borne the impact of structural reforms, and the government will take cognisance of it. “There have been various constituencies that were impacted by the reforms of last year which may require some balm, agriculture, small medium enterprises, construction, you want to be mindful of that,” Sajjid Chinoy told in an interview to CNBC TV18.
Nilesh Shah of Kotak AMC says that instead of bringing LTCG on equities, Finance Minister Arun Jaitley must focus on plugging the existing loopholes. “Plug the loopholes. Forget LTCG, what about agriculture tax?,” Nilesh Shah, Managing Director Kotak Mahindra AMC, told CNBC TV18.
If not agriculture, where else can the government look to augment revenues? “There is no other country in the world where bonus shares are valued at zero. It is only in India where we give this flexibility to rich investors to avoid paying capital gains tax. You plug the loophole, you will get probably between Rs 15,000 crore and Rs 30,000 crore,” Nilesh Shah of Kotak AMC pointed out. Abhay Laijawala says that FM Arun Jaitley can look to rase non-taxation revenue.
“The ways are through innovative means of raising non-taxation revenue. Yes, we should focus on taxation revenue, but more than taxation revenue, there are ways and means of raising non-tax revenue and in addition, we think that there are ways of looking at expenditure as well, for example, why can’t some of the infrastructure expenditure be moved off the government consolidated fund, off the Budget?” the expert said.