By Sanjay Tolia
The FM entered Parliament to present her fourth Budget with a ‘Made in India’ tablet wrapped in a red pouch like a traditional bahi khata. This was symbolic and directional, given the thrust on Digital India. In the words of the FM, the Budget sought to lay the foundation and give a blueprint to steer the economy over the Amrit Kaal of the next 25 years – from India at 75 to India at 100. Directionally, the government continues with its focus on infrastructure spending which is slated to bring the next phase of economic growth. Towards this, the PM Gati Shakti initiative promises economic transformation.
Coming to the tax proposals, one would recall that to achieve the objectives of Make in India and Atmanirbhar Bharat, the government had introduced a concessional tax rate of 15% for new manufacturing units in 2019, if manufacturing is commenced under a new entity on or before March 31, 2023. The government has extended the concession till March 31, 2024, taking cognisance of the difficulties faced by taxpayers due to the Covid-19 pandemic.
On the customs front, the Budget proposals compliment the government’s long-term vision of Make in India and sustainable growth. The stage-wise review of exemptions and withdrawal of project imports scheme should lay the foundation. As part of the Digital India initiative, the SEZ administration is slated to be moved to the Customs National Portal by September 30, 2022. Additionally, the automation and standardisation of process for imports at concessional duty rates should help faster clearances.
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Staying with the growth agenda, the government is going to set up an animation, visual effects, gaming, and comics (AVGC) task force to help build domestic capacity to serve the Indian markets and also meet global demand. Moreover, focus on sunrise opportunities (artificial intelligence, geospatial systems and drones, semiconductor and its ecosystem, space economy, genomics and pharmaceuticals, green energy, and clean mobility systems) offer immense potential for sustainable development at scale and modernise India and provide employment opportunities for youth. The other continuing focus of the government has been to promote voluntary tax compliances and reduce litigations.
Certain other amendments have also been proposed which seek to clarify contentious positions such as filing of modified return of income pursuant to business reorganisation or introduction of an enabling provision to modify the outstanding demands in cases of business reorganisation under the Insolvency and Bankruptcy Code. The proposals would facilitate business reorganisation in a seamless and a non-adversarial manner. In my view, the Budget is a testimony to the fact that good voluntary tax compliance leads to better revenue collection and a stable tax regime. There are continuing efforts around promoting voluntary tax compliance, reducing litigation, and making tax laws amenable to changing business realities and changing environment.
These foundational steps will go a long way in achieving the government’s commitment which will also give the necessary impetus to investment and growth.
The writer is Partner, Price Waterhouse & Co LLP. Views are personal.
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