The Union Budget 2017 witnessed the end of colonial-era tradition of presenting the Budget on the last working day of February.
The Union Budget 2017 witnessed the end of colonial-era tradition of presenting the Budget on the last working day of February. This change was done to ensure the completion of legislative approvals for annual spending plans and tax proposals before the beginning of new financial year on April 1, 2017.
Also, finance minister Arun Jaitley presented the Railway Budget, which was merged with Union Budget. It is a definite departure from 92-year-old convention to present a separate Railway Budget.
The D-day for the finance minister started with strong opposition from members of the House to postpone the announcement of the Budget proposals due to the untimely death of a parliamentarian. Amidst all this, the House began, after paying respect to the deceased.
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Looking at various tax proposals laid by the finance minister, at the outset, I would like to mention about the most historic and impactful economic reform which India is on the cusp of introducing i.e. Goods and Services Tax (GST).
It was heartening to note that the minister’s speech clearly emphasised the continuing efforts and tangible results to achieve the goal of implementation of GST as per schedule. He stated that the GST Council has finalised its recommendation on almost all the issues based on consensus. The preparation of IT system for GST is also on track.
Further, the government has planned extensive reach-out efforts to trade and industry for GST, commencing from April 1, 2017.
To give a context, in January this year, to augment the outreach programme, the Central Board of Excise and Customs (CBEC) has already sanctioned R1 crore as a one-time lumpsum amount to be incurred towards holding of seminars and workshops.
The roadmap of GST is based upon establishment of legal framework, preparation of IT infrastructure and change management (training the revenue officials and outreach programmes for trade and industry). All these three areas are on the verge of closure, as the model GST legislation and IT infrastructure is almost ready.
Also, the government is planning the outreach programme to educate the trade and industry.
Putting the pre-Budget apprehensions at rest, the minister abstained from increasing the rate of tax on services. There was a fear that in order to align the tax rate on services with the proposed GST regime, service tax rate may be increased by 1-3%. This appears to be a rational decision, as eventually GST is likely to be implemented from July 1, 2017 and increased rate in the present tax scheme would not have been a welcome move.
Impressing upon the ‘Make in India’ policy, the Budget has proposed reduction in customs duty on specified inputs and raw materials to lower the manufacturing cost in India.
Taking the loop from the aftermath of demonetisation and to promote cashless transactions, various devices used at point of sale (PoS) such as micro ATM, miniaturised PoS card readers for m-PoS, iris scanner, finger print readers/scanners along with the parts and components have been given duty benefits both under Customs and Central Excise. This would reduce the cost of such terminals, thus making them affordable for use by small scale traders.
To sign off, the Budget proposals reflect a balanced theme with clear focus on socio-economic obligations.
(Inputs from Preetam Singh, Consultant – Indirect Tax, PwC)