The Union Budget presented on the 1st of February presented a mixed picture.
It did not meet expectations of the Big Bang reforms but did lay out the road map of the govt. - for the future years.
There were no tax benefits for investors either - no benefits on Long Term Capital Gains Tax and none to reduce taxation on investments.
The budget in fact laid out a different (optional) tax structure for salaried class and self employed and the direction is very clear i.e. the govt. wants to simplify the tax structure - lessen deductions (there were 120 of them till now) and reduce the tax rate. Makes no (or very little) difference in your tax out go but it does simplify the tax system - a net positive move in my view.
Same is the case of abolishing Dividend Distribution Tax. While dividends will get added to your incomes now, and get taxed in your hands, but the system stands simplified.
Add the pieces together and the direction is clear. Whether for corporates or individuals; reduce deductions or benefits and reduce taxes i.e. simplify the system. At least this part is clear.
Also do remember that only 4% of people in India pay Income Tax - so this may be a "high decibel less impact case".
So what else happened :
It did not meet expectations of the Big Bang reforms but did lay out the road map of the govt. - for the future years.
There were no tax benefits for investors either - no benefits on Long Term Capital Gains Tax and none to reduce taxation on investments.
The budget in fact laid out a different (optional) tax structure for salaried class and self employed and the direction is very clear i.e. the govt. wants to simplify the tax structure - lessen deductions (there were 120 of them till now) and reduce the tax rate. Makes no (or very little) difference in your tax out go but it does simplify the tax system - a net positive move in my view.
Same is the case of abolishing Dividend Distribution Tax. While dividends will get added to your incomes now, and get taxed in your hands, but the system stands simplified.
Add the pieces together and the direction is clear. Whether for corporates or individuals; reduce deductions or benefits and reduce taxes i.e. simplify the system. At least this part is clear.
Also do remember that only 4% of people in India pay Income Tax - so this may be a "high decibel less impact case".
So what else happened :
Well the Import duty rates have also been hiked for goods like electric motor vehicles, footwear, furniture, and electrical appliances to synchronise the ‘Assemble-in-India’ pitch with the ‘Make-in-India’ anthem.
Which means that besides emphasising on"Make in India" the govt. also wants to emphasise on "Assemble in India". So import of finished good attracts high import duty but if you import components and "assemble" In India the net duties are less.
The Third theme is privatisation.
Disinvestment target for the coming financial year is Rs. 2 lakh crores. This includes taking One of India's largest companies - LIC (Life Insurance Corporation of India) public.
As the above slide in "The Economic Survey" clearly indicated - the case for privatisation is strong as it brings in more efficiency.
So; Simplification and rationalisation of taxes; Higher import Duties on Finished Goods and Privatisation seem to be defining the broad direction of the budget. Strategies need to align accordingly - the earlier the better,
