Budgets And Taxes

With revenue targets having been met, will the upcoming Budget—the last full one before the general elections—provide relief to taxpayers?

- Dinesh Kanabar

Whenever the budget is around the corner, there is huge media speculation about the changes that the Finance Bill will likely introduce. This year is no different and the expectations from India Inc. and other constituents are as high as every year, ifnot more. The good part this year is that there is good tax buoyancy and the revenue targets have also been considerably exceeded. Plus, this is the last substantive Budget before the general elections begin, and hence, we are not likely to see many revenue-raising measures. The one priority of this government is the Make in India programme. And the leading proposal from India Inc. is that the 15 per cent tax rate for new manufacturing companies—available to ventures that were registered on or after October 1, 2019, and commence manufacturing before March 31, 2024—be made a longterm part of the tax laws without any sunset clause). Given the opportunity available for India to emerge as a China+1 or Europe+1 alternative for manufacturing coupled with the time it takes to set up anew industrial unit, the suggestion seems very reasonable.

The second issue is the higher surcharge on high-income earners. After a regime of high taxation and tax evasion, the country had settled ona reasonable tax rate of 35 per cent on such individuals. When the surcharge was levied, the maximum marginal tax rate applicable on high-income earners was pushed to 42 per cent. Surcharges should be atemporary measure for a specific cause. In this case, there is aneed for a serious relook at the surcharge and bring back the maximum marginal tax rate to 35 per cent.