UNION BUDGET: BLOWING HOT AND COLD
The Union Finance Minister did a laudable and courageous job by his announcement of upward
revision of income tax slabs substantially. The reduction in Excise Duty all across and specific
sectors will improve consumer spending. The regulatory actions in custom duty reduction in
selected areas will partly arrest the inflationary tendency. The proposal to waive farm loan of Rs. 60,000 crore is only a gratitude to the farmers by the nation. The poor value addition in agriculture and the inaction on the part of the government to empower agriculturists by providing agriculture infrastructure including cold chain, warehouses, irrigation and the farmers’ ability to hold the farm produce to be sold at lucrative prices, has resulted into extremely poor financial condition of the Indian farmers. The waiver of loan may not be the solution; it can only act as an interim relief. The real solution lies in empowerment. The shift in securities transaction tax, from a rebate in income
tax to a deduction from income cannot be supported as it changes the very basis of STT which was brought in as a presumptive tax and not a transaction cost. The Finance Minister has increased taxation on short-term capital gain to 15% without addressing the controversy of investment income
vs. business income. The current litigation has to be replaced by clear guidelines, may be based on a period of holding also of a short term capital asset or alternatively the best would be to allow the treatment as per books of account maintained in the ordinary course which indicates the intention of investment / business. The non-imposition of service tax on lawyers and continuation of tax on
Chartered Accountants on same services is highly unjust. We do not want any FM of this country to be perceived as a partisan to a particular profession. Public finances of India are suffering from a very serious debt trap. The central government tax collection is around Rs. 5.08 lakh crore whereas interest payment and repayment of debt is about Rs. 5.20 lakh crore. The profession of Chartered Accountants has to provide a solution to the government by comprehensive debt restructuring. A proper accounting of plan and non-plan expenditure, proper classification of revenue and capital expenditure and introduction of a comprehensive generally accepted accounting system based on double entry accounting are very necessary to leverage on government assets and retire all debts in a planned systematic manner. The Government should set up a sub-group whereby CA profession can suggest how to come out of the major problems. Currently only about Rs. 31000 crore are being spent on plan capital expenditure of the government against a total budget of around Rs. 8 lakh crore. The increasing percentage of tax collection as compared to GDP is a matter of great concern. The central
government revenue itself is more than 12% of GDP and when we add the State Government tax revenue, the total become even more than 30% of the GDP. This may be seen as a crime on the part of the government to collect so many taxes requiring immediate attention and remedial restructuring across board. Famous Indian Economist and politician of our ancient times, Chanakya mandated “The King has no right to levy tax more than 1/6 of income i.e. more than 16% of income”. The
Government is thirsty in spite of so many taxes. We all need to find a solution to this enormous socio-
economic aberration.
revision of income tax slabs substantially. The reduction in Excise Duty all across and specific
sectors will improve consumer spending. The regulatory actions in custom duty reduction in
selected areas will partly arrest the inflationary tendency. The proposal to waive farm loan of Rs. 60,000 crore is only a gratitude to the farmers by the nation. The poor value addition in agriculture and the inaction on the part of the government to empower agriculturists by providing agriculture infrastructure including cold chain, warehouses, irrigation and the farmers’ ability to hold the farm produce to be sold at lucrative prices, has resulted into extremely poor financial condition of the Indian farmers. The waiver of loan may not be the solution; it can only act as an interim relief. The real solution lies in empowerment. The shift in securities transaction tax, from a rebate in income
tax to a deduction from income cannot be supported as it changes the very basis of STT which was brought in as a presumptive tax and not a transaction cost. The Finance Minister has increased taxation on short-term capital gain to 15% without addressing the controversy of investment income
vs. business income. The current litigation has to be replaced by clear guidelines, may be based on a period of holding also of a short term capital asset or alternatively the best would be to allow the treatment as per books of account maintained in the ordinary course which indicates the intention of investment / business. The non-imposition of service tax on lawyers and continuation of tax on
Chartered Accountants on same services is highly unjust. We do not want any FM of this country to be perceived as a partisan to a particular profession. Public finances of India are suffering from a very serious debt trap. The central government tax collection is around Rs. 5.08 lakh crore whereas interest payment and repayment of debt is about Rs. 5.20 lakh crore. The profession of Chartered Accountants has to provide a solution to the government by comprehensive debt restructuring. A proper accounting of plan and non-plan expenditure, proper classification of revenue and capital expenditure and introduction of a comprehensive generally accepted accounting system based on double entry accounting are very necessary to leverage on government assets and retire all debts in a planned systematic manner. The Government should set up a sub-group whereby CA profession can suggest how to come out of the major problems. Currently only about Rs. 31000 crore are being spent on plan capital expenditure of the government against a total budget of around Rs. 8 lakh crore. The increasing percentage of tax collection as compared to GDP is a matter of great concern. The central
government revenue itself is more than 12% of GDP and when we add the State Government tax revenue, the total become even more than 30% of the GDP. This may be seen as a crime on the part of the government to collect so many taxes requiring immediate attention and remedial restructuring across board. Famous Indian Economist and politician of our ancient times, Chanakya mandated “The King has no right to levy tax more than 1/6 of income i.e. more than 16% of income”. The
Government is thirsty in spite of so many taxes. We all need to find a solution to this enormous socio-
economic aberration.
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