Ticks the right boxes: Rajiv Anand

Today's Budget proposals should be seen against a tough economic backdrop. Expectations from the Budget in terms of tax policy were limited, given the large deficit and economic slowdown. The key change was the imposition of a surcharge of 10 per cent on income tax for high earners with taxable incomes above Rs 1 crore. A similar surcharge will also be imposed on corporation tax and dividend distribution tax. The rates of Securities Transaction Tax were reduced and a CTT was imposed on commodity trades on exchanges.

The Budget expects a mix of revenue buoyancy and expenditure consolidation measures, with the twin objectives of fiscal consolidation and boosting growth. The FM expects tax revenue to grow 19 per cent next year, while expenditure is expected to grow 16 per cent. Coupled with higher expected receipts from PSU dividends and divestments, the fiscal deficit is expected to come in at Rs 5.4 lakh crore.

The overall changes in tax rates were expected to marginally increase the collections. Thus, the expected increase in tax revenue of 19 per cent appears optimistic, given that the GDP growth envisaged by the Economic Survey is only 6.1-6.7 per cent.

Overall, the Budget seeks to tick the right boxes in terms of target for fiscal and revenue deficits. However, aggressive expectations of tax revenues, divestments and reduction in subsidies may prove difficult to achieve.

For the mutual fund industry, there were mixed outcomes. RGESS was expanded to include listed equity schemes and the tax exemption for securitisation income was clarified.

Rajiv Anand
CEO, Axis Mutual Fund