Just like before every Friday movie release, every actors feels goose bumps or before any big cricket finals, players are having sleepless night, Finance Ministers are hard put to prejudge and predict the outcome of budget speech. Will it click? Will the chemistry work? This is in spite of the 25 years of economic liberalization, covering trade, expenditure, tax policies, infrastructure to mention a few. The forthcoming budget will be no exception.

Some challenges before Finance Minister

First is the issue of fiscal consolidation versus growth. The Finance Minister had presented a new fiscal road map entailing a fiscal deficit of 3.9 per cent this year and declining to 3.5 per cent in the coming year. Given that private investment is subdued and hesitant, should the fiscal road map for next year be recalibrated to, say, 3.7 per cent or 3.8 per cent? The resultant extra resources (to the tune of Rs.28,000-Rs.42,000 crore) can be used to support public outlays in infrastructure.

Second, is increasing NPAs. Current estimates on non-performing assets (NPAs) of banks vary widely and while Rs.3.36 lakh crore (by September 2015) is the proximate figure, the more likely number is Rs.5 lakh crore. The impending NPAs could make this higher.

Third, on #tax reforms, hopefully the GST (Goods and Services Tax) legislation can be enacted sooner than later. Its compelling economic rationale needs no reiteration.

Investor confidence in India has shaken due to the shadows of retrospective taxation and damage control by other means like accepting arbitration awards, not appealing against court decisions, seeking alternative dispute redressal mechanisms have failed to dispel investor uncertainties which needs to be addressed upfront.

On corporate taxes, the issue of whether to reduce them to 25 per cent in one go or calibrate them over four years or accelerate the pace of calibration and getting rid of exemption is a difficult balancing act.

Finally, the issue of public-private partnerships. PPPs need to be reinvigorated by accepting the recommendations of the Kelkar committee. Equally, the recommendations of TRAI (Telecom Regulatory Authority of India) for a PPP model to ensure broadband connectivity to cover all the 2,50,000 panchayats deserves priority.

Few Expectations from Budget on #tax front

• #Corporate tax rate should decrease and tax exemptions should be rationalized
• In order to encourage startups, some #tax exemptions or incentives be announced
• 206AA not to be triggered if DTAA provides lower tax rate
• #DTAA benefit should be allowed on basis of self-declaration instead of TRC
• Interest should be allowed on refund of excess payment of self-assessment tax
• Clarity on #taxability of Joint Development Agreements
• Clarity on taxability of secondment agreements
• Rate of Service-tax and its threshold limit likely to be increased
• Separate provisions required for E-Commerce transactions
• Credit of Swachh Bharat Cess should be allowed
• Need to rationalize Customs Duty Structures
• There should be some clarity on the accumulated balance of EC & SHEC

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 I am the senior partner in EzyBiz India Consulting LLP which is based in New Delhi, India. For any queries relating to Taxation, Regulatory, Legal or Assurance kindly drop a mail @ anil@ezybizindia.in or contact@ezybizindia.inand we would be happy to assist.