Opportunity to portray India as tax friendly

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Published: March 1, 2015 3:30:31 AM

IF one looks at the Budget, beyond the statement of accounts, it had two clear elements — firstly, it gave specific...

IF one looks at the Budget, beyond the statement of accounts, it had two clear elements — firstly, it gave specific targets as to where this government would like to take India to in the next five to seven years like the ambitious housing for all by 2022. Secondly, it has started giving shape to the plan towards building India for the future. It is always difficult to steer a large and complex country like India and, therefore, needs a careful balancing between long-term direction versus short-term optimisation taking into account various stakeholder needs.

In the given context, I would like to discuss five announcements. Firstly, the idea of monetising the gold inventory is an innovative way to provide a revenue flow in the hands of those having gold through a transparent mechanism. If implemented properly, this can potentially reduce volatility in gold prices. Secondly, the FM has provided the framework for a social security system in India, which, if implemented properly, will ensure that a significant size of the population will be able to plan for a dignified old age.

Third, regarding the intention to revamp the Bankruptcy Code and replace the SICA and the BIFR. A more progressive and speedy bankruptcy management process would enhance India’s capital productivity of already invested assets and lead to a better credit standards in the banking sector. Fourth, the determination regarding black money was evident when the FM laid out the framework for a new law. I believe an effective law with strong deterrent has the potential to plug the proliferation of black money and increase the tax to GDP ratio.

Finally, the government has demonstrated its principle for a stable tax regime by reducing corporate income tax over four years and making GAAR a prospective legislation. India has an opportunity to position itself as an attractive economy for capital investments and a tax friendly and tax competitive destination for investors.

By Koushik Chatterjee, Group ED (finance & corporate), Tata Steel

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