FM Throws Please-All Tax Budget Googly

by Harish Gupta, National Editor, Lokmat Group

FM Throws Please-All Tax Budget Googly

Cuts Taxes, Withdraws DDT

But Takes Away 70 Exemptions

Sensex down 1000 points

Harish Gupta

New Delhi, Feb 1

Finance Minister Nirmala Sitharaman Budget echoed what the industry was telling Prime Minister Narendra Modi for months - put more money into the hands of the people by reducing tax. She has done exactly the same by reducing personal tax and in the process took a hit of Rs 40,000 crores. Tax payers can pay less taxes under the new system, save more money and spend as they wish. The slabs have been reduced considerably for those earning up to Rs 15 lakhs a year.

But there was a catch ! The FM introduced a “Dual Personal Income Tax” system whereby the tax-payer will lose benefits of 70 out of 120 exemptions that were available to them. The tax payers can opt for any of the two systems. If you want old system of taxes you take advantage of all 120 exemptions. If you want new system, pay less and lose 70 exemption.

This is a googley and no one is sure who will opt for whom. After introducing the “Dual Tax system” for the Corporate sector where it can opt for old 22% tax slab or new 15% slab, the same comes for personal tax too. Obviously, the government wants people to spend money instead of saving and prop up the economy. The slow-down is largely because people are not spending the money.

Another big boost given to companies was withdrawal of Dividend Distribution Tax (DDT). This is surely music to the ears to the companies and foreign investors too. However, the individual tax payers will have to pay dividend tax irrespective of any slab he may be. This is another googly.

However, the government took a series of steps in the Budget to end tax terrorism including creating an institution of a new taxpayer charter, amending the Companies Act to bring criminal liability in certain areas to end, bring faceless appeals etc.

True to the commitment made by PM Modi, the Budget also gives a boost to Make in India and Assemble in India by enhancing customs duty on variety of items and reducing excise duties.

What has baffled everybody is that the please Industry Budget has taken the Sensex crashing by 1000 points today. But Nirmala Sitharaman was confident when she said today, “Wait until Monday, why rush to a conclusion... the full implications will be understood by then.”

Interestingly, PM Modi did not launch any big ticket scheme. Rather, the government slashed allocation for major schemes in the Budget for next fiscal.

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PM burning midnight oil on Budget

by Harish Gupta, National Editor, Lokmat Group

special report

PM burning midnight oil on Budget

Holding one-to-one meetings with Industry Honchos and all

PM's “Bold Budget” in the making 

Harish Gupta

New Delhi, Jan. 20

Prime Minister Narendra Modi is burning midnight oil and closely monitoring every key proposal in the making of the Union Budget to be presented on February 1. The grapevine has it that the Prime Minister is summoning every key secretary in the Finance Ministry and discussing in detail impact of proposals to be incorporated in the Budget. He has met secretaries of other key ministries personally to

look into every nitty-gritty.

The Prime Minister is aware of the fact that the coming Budget is being looked upon by various sector with tremendous hope in the wake of slow-down in the economy and job losses. Every sector is looking up to the Prime Minister in the Budget. Though the Prime Minister deployed Finance Minister Nirmala Sitharaman to address issues relating to various sectors and she tried her best. But somehow, she failed to infuse confidence and the Prime Minister took the command in his own hands.

If he met the top industrialists in a group ten days ago without the aide and assistance of Nirmala Sitharam, he is reported to have held one-to-one meetings with top honchos to understand what exactly should be done to cheer up the sentiments. Since the fundamentals of the economy are fine, the Prime Minister wants specific ideas and steps to be taken.

The PM also met economists collectively at the NITI Aayog meeting and individually also many of them. He had wide-ranging consultations with other stake holders; be it real estate, NBFCs, infrastructure and others.

He held a series of meetings with the Council of Ministers .

It is clear that Modi wants to make his “Make in India” program a grand success and revive the Indian industrial sector in a big way by curtailing imports on more than 200 items. His focus is not only sin goods but other bulk items which are being dumped in Indian bazars.

In order to infuse confidence in the Corporate sector, he has directed the Corporate Affairs Ministry headed by Nirmala Sitharaman to de-criminalized as much as 50% such clauses. The government had imposed Long Term Capital Gains (LTCG) tax in last year's budget. Now this may be tweaked to bring in at par with global practices. There is demand that Dividend Distribution Tax be scrapped which is currently at 20.56% or reduce it.The personal Income-Tax rate may be cut to some extent to boost the purchasing power.

The PM's watchful eye forced the Nirmala Sitharaman ministry to withdraw the ITR forms she had issued causing serious anxiety among the tax payers. The PM wants to punish some over-jealous officers in the revenue department. But now it will be after the Budget session.

By all accounts, it will be the PM's “Bold Budget” to be read by the FM.

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Modi govt. Sets new precedent

by Harish Gupta, National Editor, Lokmat Group

Modi govt. Sets new precedent

President to address two Joint sittings in a single year

Interim Budget on February 1

Harish Gupta

New Delhi, Jan. 9

Departing from the past practice, the Modi government's Interim Budget session beginning January 31 will commence with the President's address to the joint session of Parliament.

This will be first time in several decades that the President will be addressing two joint sessions of Parliament in a single year on the opening day of the session.

The President will open the Parliament's session on January 31 and then again do the same when the 17th Lok Sabha is elected and both houses are summoned by the new government in June, 2019.

In a sudden move the government decided to declare Lok Sabha sine-die last night immediately after the Constitution's amendment bill giving 10% reservations to the upper strata of the society was passed. This was contrary to all conventions and past practices. It had been decided that the Winter session will be adjourned on January 8 and meet on again on January 31. The parliament won't be prorogued.

But last night the Lok Sabha adjourned sine die and the Rajya Sabha will also adjourn sine die after passing the reservation bill.

Highly placed sources in the government say that this decision was taken as Rajya Sabha could not pass several important bill including Triple Talaq, Indian Medical Council (amendment), Aadhaar & other Laws and National Register of Citizenship Bill relating to Assam. The government would now be forced to bring Ordinances to ensure continued implementation of these bills. Otherwise, some of the key bill will lapse. These sources say that if the Parliament is not prorogued, no Ordinance can be issued.

Therefore, it was decided that let both Houses adjourn sine die and fresh session be convened on January 31 and the President be requested to address the joint sitting on the opening day.

Finance Minister Arun Jaitley is likely to present an interim budget on February 1.

The Budget Session of the Parliament is likely to be held between January 31 and Feb 13, and an interim budget is expected to be presented on February 1.

The Cabinet Committee on Political Affairs deliberated on the dates for the budget session at a meeting. It is expected to be the last session of the current Lok Sabha as general elections are due in April-May.

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