Experts hail GST roadmap, Gaar deferment, tax predictability

Experts hailed the tax proposals made in the first full Budget of the Narendra Modi Government, saying it lays down a clear roadmap for GST implementation and attempts to deal with black money in a credible manner.
Welcoming the Budget presented by Finance Minister Arun Jaitley today, KPMG India's Girish Vanvari said, "the Budget lays down a clear roadmap for GST implementation and attempts to deal with black money in a credible manner."
On the decision to defer Gaar (rules on tax avoidance) implementation by two more years with prospective effect, he said it is a welcome step and great relief.

Similarly, reduction in tax rates for royalties and technical services to 10 per cent, non-applicability of MAT to FIIs, clarity on taxation of REITs, AIFs are also positive steps, Vanvari said.
"A road-map for a futuristic tax regime of lower corporate rates and phasing out of exemptions over the next four years heralds an era of a transparent tax regime," he said.
Haigreve Khaitan of Khaitan & Co described the Budget as "positive and well thought-out" with a long term vision in mind. It has removed some key concerns such as Gaar, taxation of indirect transfer of assets and MAT. Moreover, the move to lower corporate tax rates while curbing exemptions is also a welcome measure.

On the direct tax proposals, Khaitan & Co's Daksha Baxi said the Budget has rightly recognised the need to give 4-year road-map to enable businesses to do their long-term planning, which is evident from 5 per cent reduction in corporate tax to 25 per cent over the next four years.
The new exemptions to income tax will help increase spending power and savings. By this the Minister has achieved dual purpose of spurring demand and increase availability of retail saving for investments, Baxi said.
On the indirect tax proposals, KPMG's Sachin Menon said "the increase in service tax from 12.36 to 14 per cent is a precursor to GST introduction. This would avoid the feeling of steep increase of taxes on services in GST as the proposed rate under GST is 16 per cent or more. Service industries shall be geared to factor in even a higher service tax cost next year.