The Hon’ble Finance Minister set the tone for the Budget proposals, when he mentioned that one cannot ignore the grim global economic scenario, as well as the growth challenges of our country. The government has rightly acknowledged that increasing subsidies have been the root cause of increasing current account deficit. Proposal to implement direct transfers of subsidy should reduce leakages in the system. Steps have been taken to revive the capital markets by giving incentives to retail investors, which is a positive measure. Allowing QFIs to access the bond market should deepen this market.
Renewed focus of the government on the infrastructure and manufacturing sector is a welcome step. Widening the end-use requirements of ECB is a welcome step. No clear path has been laid out for DTC & GST. Weighted deductions for R&D and agri-extension services are positive proposals. Introduction of APAs and removal of sector restrictions for venture capital funds is a good step. Introduction of GAAR prior to DTC comes as a surprise.
Retrospective amendments to nullify the recent Supreme Court decision in the Vodafone matter is a big dampener and would negatively impact foreign investor confidence in the country. Service tax framework has been completely overhauled. Increase in Service tax and standard excise duty from 10 per cent to 12 per cent was expected and should partly address the fiscal deficit issues faced by the government.
Russell Parera CEO, KPMG
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