The union budget 2015 is overall a very innovative and comprehensive budget which addressed most of the crying needs of the economy and went a step beyond. The budget also laid out a changed role of the government from being an agency for granting to an agency that is more of a referee and arbitrator.
The budget has a slew of initiatives on ease doing of business in India, starting with fresh bankruptcy code, Plug and play model for large investments in manufacturing, starting business without prior approvals and taking approvals later and addressing the issue of permanent establishment tax on funds, encouraging relocation of offshore fund managers to India.
Providing a time table for reduction in Corporate tax to 25% from the current 30%, over a period of 4 years was very welcome. In addition, providing a framework for a cleaner tax structure provides an enhanced sense of taxation stability. This includes steps such as removing wealth tax from personal taxation.
The budget also provides for rectifying the inverted duty structure in manufacturing, which will significantly promote Make in India. It also provides more money into the pockets of the middle class through increased tax benefits, which will hopefully spur domestic demand, leading to a virtuous cycle.
Although the budget did mention allocation to Heritage cities and housing for all, but it missed any mention of Smart cities. Perhaps the details of the budget has allocation to Smart Cities as Smart cities would provide the investment boost that the country requires. The budget is definitely pathbreaking and clearly lays out the reformist agenda of the government.
By Jaijit Bhattacharya, Partner, Infrastructure, Government and Energy, KPMG