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Interim budget: Laying out vision on 10 most important dimensions a thoughtful move, writes Gautam Mehra

Published: February 12, 2019 2:48:09 AM

Physical infrastructure is important to business, and the Budget speech brought out the accomplishments in this regard. Regulatory infrastructure is as important to business as physical infrastructure, and does get factored in as the goalposts of the state of maturity of an economy.

Interim budget: Laying out vision on 10 most important dimensions a thoughtful move, writes Gautam Mehra

By Gautam Mehra

The build-up to the Interim Budget was interesting, with the announcement of farm loan waivers by some state governments, different expectations from the Budget, concerns about the fiscal deficit being contained, and the parliamentary norm of not tinkering with the Income-tax Act. Amidst this, the finance minister stood up and presented on the past, the present and the future—summarising the achievements of the present government over its term, announcing benefits to farmers, workers in the unorganised sector and income-tax payers, all in the lower strata of their respective groups, and laying out a vision on the 10 most important dimensions, going up to the year 2030.

While this, along with the shortfall in collection of GST revenues, has resulted in the fiscal deficit slipping to 3.4% in the current year, the glide path to containing the fiscal deficit to 3% by 2020-21 was simultaneously laid out. Physical infrastructure is important to business, and the Budget speech brought out the accomplishments in this regard. Regulatory infrastructure is as important to business as physical infrastructure, and does get factored in as the goalposts of the state of maturity of an economy.

Notwithstanding teething issues, the rolling out of the insolvency law and GST have indeed been big and bold developments on this front, and should hopefully bring in the full benefits in the years to come. Digital and technology spanned across many of the 10 most important dimensions stated up to the year 2030. At a more granular level, the proposal to process income-tax returns in 24 hours along with a simultaneous issue of refunds is a very specific and laudable goal. And the plan to verify and assess almost all returns electronically by both tax experts and tax officials is another big one.

Two tax proposals were very targeted in their approach and wide in their coverage. One was that of increasing the TDS free receipt of interest from banks and post offices from Rs 10,000 to Rs 40,000, and the other pertained to benefiting individual resident taxpayers having a total income of up to Rs 5 lakh. The latter would ensure that while taxpayers in the income range of Rs 3.5 lakh to Rs 5 lakh get the tax benefit, they continue in the tax database by filing a simple tax return electronically. And, of course, there is the small benefit for the salaried class beyond Rs 5 lakh, in the form of a hike of Rs 10,000 in the standard deduction.

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Given the vast employment opportunity that the real estate sector generates, and the impact that demonetisation, RERA and GST have collectively had on this sector, industry and investors will indeed welcome the direct and indirect benefits spanning across various fronts, including removal of the notional tax on the second self-occupied property, extending the tax exemption on stock-in-trade to two years, extending the approval time for affordable housing projects by another year to March 2020, permitting the capital gains benefit for investment in two houses for gains up to Rs 2 crore, and hiking the TDS free receipt of rent income from Rs 1.8 lakh to Rs 2.4 lakh. Of course, home-buyers would also be keenly awaiting recommendations from the GST Council.

Various reasons have led to a steep downward revision of Rs 1 lakh crore in the GST collection estimates for the current fiscal, and it is heartening to note that corporate tax collections estimates are encouraging and the revised numbers are expected to make up about half of this shortfall. Last, but certainly not the least, a big thank you to the finance minister, for thanking taxpayers and noting their valuable contribution towards nation building and providing a better life to others. In the din and noise, this piece gets lost out more often than not.

(The author is partner & leader, Tax & Regulatory Services, PwC India)

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