Budget 2014: The Long List of Reforms for Modi Government

Budget 2014-15

The biggest challenge in front of India’s next government is to pull the economy out of its deepest slump. Here are 10 reforms that need immediate attention-

To help banking and insurance
The upcoming 5 years of banking, insurance and financial services in India are probably to be most important since liberalization.

The government should focus on critical areas like international acquisitions, facilitating consolidation and expansions, setting up a nodal agency for NPA, providing tax incentives on insurance products and raising the FDI cap in insurance from 26% to 49%, resolution.

To tax retrospectively
A country which is aspiring to become as one of the five largest economies of the world need to have fairness, equity and stability in its tax system and it is the right time we brought in law which disallows retrospective amendments affecting adversely the rights of a taxpayer.

To resolve the transfer pricing issue
Taxpayers are anticipated that some practical guidance would be coming in the Budget 2014 in relation to vexatious TP audit issues which could include clarity on specified domestic transactions (SDT), guidance on marketing intangible issues, reducing safe harbor margins, risk-based scrutiny and the like.

To tax or not to tax the super rich
Presently, Indian tax statute has no definition of the term ‘super-rich’, or contain any specific provisions for taxing them. Taxation of the super-rich has been recommended under the draft Direct Taxes Code (DTC) which proposes a higher tax at 35% on persons who earn more than Rs 10 crore a year .

To resolve double taxation on temporary use of IPR
It is necessary to provide exemption from service tax to solve the double taxation issue though the permanent solution to the bothersome issue of goods vs services can be developed through the legal process.

To set the goods and service tax ball rolling
The Central government needs to come up with a law that will be a precursor to the Central GST.

Reduction of rate from current 2% to 1% will give a boost to restructuring supply chains in the interim as Central sales tax has no place in GST.

To revive SEZs
This is one of the biggest challenges for the newly elected government. Despite a partial tax burden and due to delay in clearances, investors kept continued to show interest in the SEZ policies of the government.

Industry is expecting from the new finance minister to relieve them of taxes and other challenges for continued investment in SEZ.

To power up the power sector
Just about Rs 1,00,000 crores of aggregate losses of electricity distribution utilities in the country at the end of fiscal year 2012, fundamental improvements in the power industry are long overdue.

A clear road-map should be evolved to quicken up private participation in all urban distribution areas.

To build more roads and highways
The roads and highways sector has witnessed many challenges on the financing, policy and implementation front.

It has effected the investment climate leading to a decline in PPP projects, an inclination in private investment. Realizing the need to stimulate the sector, the budget is anticipated to aim at restoring investor sentiment by removing bottlenecks.

 

Source: Economictimes.com

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Posted in: Budget 2014

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