Has the Budget 2018 lost its excitement, with the introduction of GST?
'The expectations from the Budget are relatively subdued because the major portion under indirect tax has gone under GST. But, still on direct tax front and the duty structure under customs or even imports under the FDA route, the Budget has many issues to address for the industry,'
When the Goods and Services Tax (GST) came into force on July 1, 2017, it subsumed a host of indirect taxes that were levied. Taxes like Central Excise duty, State VAT, Service tax, luxury tax and others are all gone, which has also led many to question if Budget 2018 would be as exciting as before.
Now if you look at proposals which are going to be under the GST regime, those are going to be for customs and more procedural in nature. Coming to GST, all the provisions have been the same and the last amendments were made some nine months back. Procedures have changed, but some changes in law are needed and that has not happened
The Union Budgets have lost most of its sheen after GST:
After the implementation of GST, Government of India has lost the power to change the rates of Central Excise, Service Tax as these are now part of GST and only GST Council can alter the rates.
Hence, you can't expect any change the prices of goods or service after the budget, as Customs duties are more or less remaining same over last couple of years.
The only thing which people are waiting are the changes in the income tax exemption limits and the Income Tax slabs.
However, even if the IT exemption is raised from 2,50,000 to 3,00,000, the net benefit would be only Rs 2500 per annum or Rs 200 per month.
With the Government's continuous push towards speedy initiation of IT, digitisation and various technology-driven initiatives, we are very positive about the upcoming Union Budget 2018-19.
Industry friendly moves like the simplification of Customs procedures and relief in GST rates are among our key expectations.
We would also hope that in this budget the Government will take the spirit of Make in India several notches higher by introducing efficient policies to promote domestic manufacturing of future-proof technological IT products.
Certainly this Budget will reassure and bring back the lost confidence amongst NBFCs. We appreciate the government's move for reducing the tax burden on MSMEs.
The measures for addressing the Non Performing Assets will ignite a ray of hope across the industry.
We are glad about the government's decision to double the Allocation to Digital India scheme to Rs 3073 crore which will accelerate the transformation of India into a digital economy.
What makes this Budget ugly is the fact that the government breached the fiscal deficit target of 3.2 per cent and will close the fiscal at 3.5 per cent. Sure, the FRBM allows such latitude up to 0.5 per cent. But this balance sheet will also fail to deliver the 3.2 per cent target next year as well (deficit projected at 3.3 per cent).
Not sticking to the fiscal roadmap has consequences. For one, global credit ratings agencies will look at it unfavourably and a lower rating has a bearing on foreign investments.
Higher fiscal deficit also raises government borrowings, which in turn crowds borrowings the private sector can take.
Besides, it causes inflation and generally leads to the government raising taxes to make up for the shortfall. That's the last thing the government can afford now.
As anticipated this is certainly a well balanced Budget keeping in mind the politics, election and solid long term economic growth. We did see a good emphasis on rural economy and could term this as an inclusive budget for the lower strata of society.
At the same time, the development of the country as a whole continued to be the focus of the Financial Minister, with favourable announcements for the infrastructure and tourism industry. Reduction in corporate taxes is definitely a good initiative, given the impact GST has had on some sectors.
Continued focus on infrastructure, digital initiatives and education sectors shows the long-term approach of the government. While the implementation of some of financial tools like GST have been successful, the complete impact on GDP and controls can only be measured over a period of 1-2 years.
The government has to provide alternate channels so that common people and entrepreneurs don't suffer. The revenue tools need to be better defined and not mixed with funding for MSMEs/SMEs/Start-ups.
Moreover, with major states bound for polls this year, observers expect the budget to be weighed in favour of the farm sector at a time when data shows a dip in agriculture growth and the sector under stress.
I also support introduction of long term capital gain tax as this is one way to track and control tax evasion by many. Overall this is definitely a positive budget for the nation and the economy.
- LAXMI PRASAD