The reduction in corporate tax is a positive. it will make Industry more competitive. but with gst in the pipeline, proposed hike in service tax was not necessary
Finance minister Arun Jaitley may not have made any big-bang announcements in his Union Budget for 2015-16, but he has clearly displayed the government’s intent to put the economy on a faster growth trajectory. With a series of announcements, the government has presented an inclusive and balanced Budget that seems all set to take forward the reforms agenda.
Its commitment towards introducing the long-pending goods & services tax (GST), besides increasing focus on rural development, infrastructure and health are big positives for industry, which would not just boost overall confidence, but also go a long way in generating employment. The GST is seen as Independent India’s biggest reform and the announcement that it will finally be introduced on April 1, 2016 is definitely good news for industry.
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GST, which aims to replace a series of existing taxes such as excise duty, service tax and value-added tax, will help in streamlining tax administration and result in higher tax collection for both the centre and the states. According to independent estimates, it will provide a stimulus to the economy and could push economic growth by up to 2%. The increase in service tax from 12.36% to 14%, however, could have been avoided at this stage especially with GST in the pipeline.
Jaitley’s focus has also been on empowering the aam aadmi as the individual tax payer can now get exemptions of up to R4.4 lakh. This would provide a much-needed relief to the salary earners and put more savings in the hands of the common man. This, coupled with the abolition of wealth tax, will go a long way in fueling consumerism.
The reduction in corporate tax is a positive and will help make India Inc more competitive. It is also heartening to see that the new government has stressed on the need to make borrowers more accountable and the intent to introduce a bankruptcy law is a good step.
I also welcome the finance minister’s renewed focus on improving infrastructure. Providing good infrastructure, particularly improving connectivity to the hinterland, has been mentioned as a thrust area for the government.
I am quite happy with the government continuing the rural focus and looking at enhancing allocation to MGNREGA, besides focusing on skill development for the rural populace. The large outlays on infrastructure and MGNREGA will help revive the economy by stimulating investment and consumption. These initiatives would help put more disposable income in the pockets of the rural consumer, improve their standards of living and ensure continued rural demand for branded consumer goods.
Overall, I would rate the Union Budget as a forward-looking one aimed at inclusive growth.
By Sunil Duggal, Chief Executive Officer, Dabur India