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Statement from KPMG on Budget 2015-16

Feb 28, 2015   14:22 IST 
India

Statement from Richard Rekhy, CEO, KPMG in India

The Finance Minister has come out with a pragmatic Budget which is directionally focused at achieving growth and keeping the fiscal prudence in mind. The Focus is on Ease of Doing Business in India and increased infrastructure spend. Measures like New Bankruptcy legislation, startup entrepreneur’s funds, GST rollout by FY 2016, deferral of GAAR will definitely support the cause of Ease of Doing Business in India. 

 

Statement from  Vikas Vasal, Partner -Tax, KPMG in India  

This budget reflects a pragmatic macro-economic approach to address the larger socio-development issues, and at the same time to address the key concerns of the businesses. It lays emphasis on ease of doing business in India through constructive actionable steps that will help re-build the investors’ confidence in the Indian economy. Steps like deferment of GAAR by two years and its applicability to investments made thereafter, resolve to go ahead with the GST regime, reduction in corporate tax rate over next four years to 25%, reduction in tax rate on royalty payments to 10% etc. will help boost business confidence. There has also been an attempt to address the key issues of the investors like clarity on REITs and non-applicability of MAT on FPIs etc. Overall, it’s a progressive budget with emphasis on putting India back on the agenda as an investment destination for both foreign and domestic investors.

 

Statement from Nabin Ballodia, Partner – Tax, KPMG in India

The budget has definitely sent a strong signal stressing foreign investment in many ways. Not only FM has refrained from introduction of arbitrary retrospective amendments and thus guarding investor sentiments but also the budget has introduced measures on front of ‘ease of doing business’, ‘make in India’, fostering use of ‘technology’ by reducing rate of royalty and FTS to 10%.  

 

Foreign investors will also breathe a sigh of relief as provision of indirect transfers in the Income-tax Act suitably cleaned up, GAAR deferment, and efforts in direction of reducing regulatory approvals/ authorisations etc. By laying emphasis on infrastructure, the government has set India on a growth trajectory across sectors. In the context, government has given pass through status to Rental income of REITs from their own assets and rationalised capital gains regime for the sponsors exiting at the time of listing of the units of REITs and InvITs.  

 

With the mantra of Minimum Government Maximum Governance, government has ushered ease of doing business in full force by simplifying tax procedures. For instance, online central excise and service tax registration to be done in two working days, domestic transfer pricing threshold limit increased from 5 crore to 20 crore, Wealth-tax replaced with additional surcharge of 2 per cent on super rich.

 

Statement from Girish Vanvari, National  Head of Tax, KPMG in India

Announced in the backdrop of strong domestic macroeconomic fundamentals and soaring expectations, budget 2015 is a fine inclusive balancing act. The Budget boldly resorts to a higher fiscal deficit of 3.9% to enable provision for increased outlays on various rural initiatives, socio economic schemes, infrastructure needs and more so enhanced allocations to states as per the fourteenth Finance commission recommendations. As far as tax proposals are concerned,  the Budget lays down a clear roadmap for implementation of GST  and attempts to deal with Black money in a credible manner. Deferral of GAAR by 2 years and its applicability to investments made thereafter, reduction of tax rates for royalties and technical services to 10%, non applicability of MAT to FIIs, clarity on taxation of REITs, invits and AIFs are welcome steps. A roadmap 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 of no surprises. The lack of fiscal space did not permit meeting of the popular expectations of increase in slabs and housing interest deduction for individuals or abolition or reduction of MAT for SEZs and infra companies. But all in a fine balancing inclusive futuristic budget.

 

Statement from Parizad Sirwalla – Leader Global Mobility Services – Tax KPMG

Budget 2015 gave a positive economic outlook. There is enhanced public spending resulting in higher fiscal deficit target of 3.9 % of GDP. Similar to global practices, steps taken in the direction of universal social security scheme by launch of an insurance and pension schemes. There is focus on health insurance by providing incremental deduction of INR 10,000 p.a. for health insurance premium. Pension savings boosted as the deduction for New Pension Scheme (NPS) increased to INR 150,000 p.a. The super-rich will cough up more taxes as enhanced surcharge of 2 percent (income more than approx INR 1.05 crore to be impacted by approx. 1.8% extra tax liability). This more than compensates the loss of revenue to exchequer by abolishment of wealth tax. The peak tax rate for the super-rich is increased from 33.99% to 34.61%. There is substantial focus on compliance with introduction of new law for making concealment/ furnishing inaccurate particulars of foreign income/ assets. These are now non-compoundable and prosecutable offence with a much higher penalty. All in all focus on social security, countering black money and Ache Din for Aam Admi.

 

Statement from Utkarsh Palnitkar, Head of Advisory and national leader of pharma sector, KPMG in India

Like most other sectors, the pharma sector also had high expectations, more so from the perspective of Make in India campaign where the pharma sector has been a shining example of India’s growing dominance. It was expected that specific impetus be given to the pharma manufacturing through announcements of clusters and concession related to taxation related to manufacturing as well as the irritants such as service tax on clinical trials. As such other than the overall announcement of ‘Health for All’ and creation of NIPER in 3 states, the budget does not provide any specific impetus to the pharma sector.


 
 
Richard Rekhy, CEO, KPMG in India
Richard Rekhy, CEO, KPMG in India
Mr. Girish Vanvari
Mr. Girish Vanvari
Mr Vikas Vasal

Mr Vikas Vasal
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