While industry captains are not openly coming out and commenting on the corporate tax front in the Union Budget. Some are privately opining that it was a huge disappointment. The tax rate of 25 per cent will only help small and medium companies, “but how many of them are paying taxes any way,” they wonder.
The big fishes were expecting a tax cut up to 5 per cent from the existing structure so that they will be able to be competitive enough vis-à-vis other foreign competitors since they are the ones who have to rough it up than the SMEs.
The move on political donations is a welcome move from the government to make it more transparent with good intentions. But, by putting a cap of Rs 2000 per head from Rs 20000 may not fetch the right result since there is a possibility of showing many names randomly and still they can get away with it.
The impact of demonitisation is showing signs from the fact that there is an increase of 35 per cent in the income tax advance collection which the finance minister mentioned in his speech. Capex increase of 25 per cent is another plus.
The income tax relief up to Rs 3 lakh can get some political mileage for the government, not help anyway to bring more people into the taxation bracket with their additional income.
“Overall, a good Budget,” many of the corporate heads feel. Thrust to infrastructure was inevitable considering the priority of the government to create smart cities across the country. Housing, roads, transportation, all these are good, but where the flow of funds will come from is the curiosity many of them express.
Abolition of FIPB is another welcome move by the finance minister while fiscal deficit of 3.2 per cent is another worrying factor. Keeping it below 3 per cent would have been more credible.
BW Reporters
The author is associate editor at BW Businessworld
