If there was a general budget that was eagerly awaited, it is the forthcoming one to be unveiled on February 1, 2017. That the corporate world is eagerly anticipating would be an understatement. All eyes would be on single taxation. While corporate tax rates have fallen globally in the last ten years, in India it has averaged 35% in the last two decades, making India one of the highest tax regimes.
Bringing down corporate tax rates and to what extent is what the corporate world would be interested in. Single taxation at a uniform rate would be crucial to attract investments in the economy. Bringing a cut in the corporate tax down to 25 per cent would attract investment.
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A clear road map for the implementation of GST is eagerly awaited. Presently, there are multiple excise duty rates in sectors such as textiles, cement, automobiles etc. A simplified rate structure is long desired. This budget is significant in more ways than one. The announcement of a simplified GST regime could be a game changer. The industry is ready for changes in GST, however, they need clarity sooner than later.
It is for the first time that rail budget would be merged with general budget and going by the recent developments massive investment in rail infrastructure is expected. The rail behemoth indeed needs a revamp but India Inc would also want a favourable business climate for the SME sector that employs 40 % of India’s work force.
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Another area is the innovation and startup arena that needs a fillip. Presently, India is home to the third largest number of technology driven startups in the world. If the government could recognize it as a separate asset class and create liquidity, the startup space would only become more vibrant. One looks forward to the budget 2017 for creating a conducive business climate for startups to thrive. Somehow Startup India scheme has not come as per expectation of the startup world, there is a dire need to drive it with solid leadership behind it.
Getting the balance right with due emphasis on the manufacturing sector, increasing budget for infrastructure, announce ease of doing business while executing digital transactions. In short, corporate India wants to look forward to innovative and seamless alternatives for digital transactions. The Indian economy was growing at 7.6 %. Will it continue or would it stream roll further, only the coming budget would tell.
(The article has been written by Nikhil Agarwal, Chief Executive Officer, AP Innovation Society, Government of Andhra Pradesh. All the views expressed are personal)