Budget 2014: Will there be big bang tax reforms?

Roll back retrospective tax, clear roadmap for GST, no tax hikes are some of the expectations building up before the budget

Finance Minister Arun Jaitley will present his budget proposals for 2014-15 on July 10. Expectations are high that the government will announce some big bang  policy measures in a bid to kickstart a moribund economy.

 

The underlying theme has to be non-inflationary, according to Ajit Ranade, chief economist, Aditya Birla Group.Ranade was participating in a discussion on Budget 2014 on Boom News's show #IndiaHangout in association with Business Standard.

 

"We are not expecting any tax hikes. Revenue could be garnered from non-tax sources," Ranade said.

 

He was also of the view that even if the fiscal deficit is higher than earlier estimates, it can be controlled by focussing on  non-tax revenue and expenditure cuts.

 

Corporate lawyer H P Ranina felt the focus could be on lowering subsidies."And the question is whether the Finance Minister will roll back measures announced earlier on retrospective taxes." 

 

Rohit Jain, partner, ELP, felt that the Government could announce a clear roadmap for GST.  "A clear worry is the prosecution powers given to tax authorities. It should be used only in exceptional cases. Such powers could deter foreign investors," Jain added. 

 

While Ranade said high profile tax cases should be settled across the table, Ranina pointed that the National Tax Tribunal was to take over all tax matters that are pending before the High Courts but it is still not functional. "Government should recover money in a simple way," Ranina added.

 

Ranade is expecting the Government to set an ambitious target on divestment and continue to be extra vigilant on inflation. "And lower taxes, lesser exemptions should be the norm."

 

"Clear and simple tax positions would be important," Jain said.