Monday, July 14, 2014

Union Budget 2014-15: A Budget Which Can Transform India's Tax Regime & Business Environment

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The Union Budget presented by Finance Minister Arun Jaitley contains certain logical steps to transform India’s tax regime to make it more favorable from investment and business per se. Also it contains the required steps required to create conducive environment to boost India’s business and economy manifold.

The business community has expressed the introduction of a national goods and services tax as a keyconcern. Adi Godrej, the chairman of consumer-goods company Godrej Group said, “A streamlined tax system will help the business and commerce of India to save great money, time and effort needed to pay different taxes in each of India’s 28 states.It’s by far the most important reform we all need”

Experts comment that if implemented, the GST could boost economic growth by 1 to 2 percentage points

Let’s take a glimpse at the necessary steps listed in the Union Budget 2014-15 which have been lauded by business and commerce fraternity.

Importance of proper tax regime is the need of the hour
Stability in tax regime is crucial for development of India’s business, trade and commerce industry as well as citizens of India. The proposed tax amendments can revive investor sentiments and attract huge FDI investments generating massive employment. However, again there must be determination and right intent to the fulfillment of all the objectives listed in the budget.
Investors, especially the foreign investors have expressed great dismay for the unstable tax regime of India. This has been always the main reason for drying enthusiasm towards investments and growth of business communities in India.

The problem of retrospective tax legislation-
The Government’s right to undertake certain retrospective legislations have impacted India’s economy and overall investment climate in a negative manner. There were certain retrospective amendments made to the Income Tax Act 1961 undertaken through the Finance Act 2012. This witnessed a few cases in various courts &other legal forums, for example the Vodafone Case in which the Company is liable to pay huge tax as per retrospective tax laws. Such retrospective tax regime punctures investor sentiments who get discouraged to invest in India.

The Solution-
In order to overcome this, the budget upholds tax measures to provide a stable and predictable taxation regime that would be investor friendly and spur growth. The Finance Minister said that a High Level Committee will be constituted by the CBDT (Central Board of Direct Tax). This committee will scrutinize all the fresh cases arising out of retrospective amendments of 2012 before any action is taken in such cases. This will convey about a stable tax regime to the investor community both within India and abroad and create a business friendly environment. It will instill confidence in investors thus driving India’s growth. Also,the foreign companies can obtain “advance ruling” which can resolve the huge tax liabilities of companies. Tax demand of more than 4 lakh crores is under dispute and litigation before various Courts and Appellate authorities. This is one of the serious concerns of all taxpayers in this country. With such a move where foreign companies can obtain “advance ruling” will drive more foreign direct investments (FDI) in India. This will ultimately lead to more employment and improve the standard of living of India thus benefiting everyone.
Further are additional noteworthy measures in this year’s Union Budget which will have a positive impact on India’s business, trade and commerce-
Digital India
This pan India programme named “Digital India” would ensure Broad band connectivity at village level. It will enable improved access to services through IT enabled platforms and greater transparency in Government processes. This will increase indigenous production of IT hardware and software for exports. Also and greater transparency in Government processeswill make the business community and common people feel more secured. Also if reached to its full potential, it can make every citizen of India literate and knowledgeable and improve standard of lives.
There’s also special focus to be given to support software product startups with measures to conduct training programs for people to acquire IT skills. This has the potential to make India as the leading IT hub and generate employment for millions.
A move that can propel India’s industry growth-
The eBiz platform aims to create a business and investor friendlyecosystem in India. It plans to do so by making all business and investment related clearances and compliances available on a 24x7 single portal. It also has the facility of an integrated payment gateway.
All Central Government Departments and Ministries will integrate their services with the eBiz platform on priority by 31 December this year.
A move that can propel India's trade
Exports cannot be exponentially increased unless the states play a veryactive role in export promotion. This needs provision of good infrastructure and full facilitation. The plan to establish an Export Promotion Mission which will bring all stakeholders under one umbrella is a good move. It will facilitate greater levels of trade and resolve trade disputesfaster thus propelling India’s trade to a new level.
Skill India
Last but not the least, a national multi-skill programme called “Skill India” is proposed to be launched. It would instill the required entrepreneurial skills in India’s youth.
IAM has been helping corporate personnel acquire business and entrepreneurial skills for over a decade. Several executives have greatly benefited from IAM’s seminars.The list of companies that have sent their executives for training with us includes industry leaders and corporate giants as also consulting firms. Please visit website to know more about our upcoming seminars and a fuller list of client companies.

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