New Delhi

Experts hailed the tax proposals made in the first full Budget of the Narendra Modi Government, saying it lays down a clear roadmap for GST implementation and attempts to deal with black money in a credible manner.

Welcoming the Budget presented by Finance Minister Arun Jaitley today, KPMG India’s Girish Vanvari said, “the Budget lays down a clear roadmap for GST implementation and attempts to deal with black money in a credible manner.”

On the decision to defer Gaar (rules on tax avoidance) implementation by two more years with prospective effect, he said it is a welcome step and great relief.

Similarly, reduction in tax rates for royalties and technical services to 10 per cent, non-applicability of MAT to FIIs, clarity on taxation of REITs, AIFs are also positive steps, Vanvari said.

“A road-map for a futuristic tax regime of lower corporate rates and phasing out of exemptions over the next four years heralds an era of a transparent tax regime,” he said.

Haigreve Khaitan of Khaitan & Co described the Budget as “positive and well thought-out” with a long term vision in mind. It has removed some key concerns such as Gaar, taxation of indirect transfer of assets and MAT. Moreover, the move to lower corporate tax rates while curbing exemptions is also a welcome measure.

On the direct tax proposals, Khaitan & Co’s Daksha Baxi said the Budget has rightly recognised the need to give 4-year road-map to enable businesses to do their long-term planning, which is evident from 5 per cent reduction in corporate tax to 25 per cent over the next four years.

The new exemptions to income tax will help increase spending power and savings. By this the Minister has achieved dual purpose of spurring demand and increase availability of retail saving for investments, Baxi said.

On the indirect tax proposals, KPMG’s Sachin Menon said “the increase in service tax from 12.36 to 14 per cent is a precursor to GST introduction. This would avoid the feeling of steep increase of taxes on services in GST as the proposed rate under GST is 16 per cent or more. Service industries shall be geared to factor in even a higher service tax cost next year.”

Bankers hail new fiscal road-map in “pro-growth” Budget

Terming the Budget as “pro- growth”, bankers today said the proposed extension of fiscal road-map by pushing back the 3 per cent deficit target to FY18 will help meet the current growth needs of the Indian economy.

Finance Minister Arun Jaitley, in his first full Budget, said, “with the economy improving, the pressure for accelerated fiscal consolidation too has decreased. In these circumstances, I will complete the journey to a fiscal deficit of 3 per cent in three years, rather than the two years envisaged previously.”

The Government has kept a fiscal deficit target of 3.9 per cent for 2015-16; 3.5 per cent for 2016-17 and 3 per cent for FY18.

Welcoming the Budget, SBI chief Arundhati Bhattacharya said the Finance Minister has laid out a clear and tangible road-map for the future.

“The decision to incentivise credit and debit card transactions coupled with the proposed new law on black money will bring down the social cost of unaccounted money, apart from adding to the bank bottom-line,” Bhattacharya said.

On the move to frame a Public Contract Bill, she said the move will kick-start activities in the construction sector plagued by disputes. The move to bring NBFCs at par with financial institutions will help banks when it comes to loan recovery and allow them clean up their balance sheets by selling stressed assets at an early stage to ARCs.

The plan to frame a new bankruptcy law, sprucing up public investment to channel private investment and monetisation of gold assets are positive steps, she added.

“The fiscal target of 3 per cent by FY18 is prudent while at the same time it balances the current growth needs of the economy,” Chanda Kochhar, CMD of ICICI Bank, said.

She said there is a clear and sharp focus on the four key areas of growth, inclusion, fiscal prudence and tax rationalisation.

“The theme of inclusion is reflected in the measures taken to empower all stakeholders – there is greater devolution of resources to states and there are a number of measures for the poor, youth and senior citizens.”

Indian Banks Association Chairman T M Bhasin termed the Budget as “forward looking, “pro-growth”, pro-poor, pro- agriculture and pro-infrastructure,” with focus on health, housing, education, social security and uplifting the underprivileged. .

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