Budget arouses mixed feelings among financial experts

Senior Bombay High Court counsel Vikram Nankani did not mince his words. Stating the Finance Minister lacked confidence to introduce the GST (Goods and Services Tax) in this year’s Budget, which has been ‘shelved’ till April 2016, Nankani said with regard to the service tax rules, the Finance Minister “wants its pound of flesh from e-commerce retailers.”

Nankani, who is also the Chairman of the Indirect Taxation Committee of the Indian Merchant Chamber (IMC), was speaking at the CH Bhabha Memorial Endowment Public Meeting organised by the IMC, where a cross-section of financial experts had gathered to discuss threadbare the implications of the Budget presented by Finance Minister Arun Jaitley.

However, Nankani was appreciative of the new FEMA provision. “If you have any concealed assets outside India, the government can attach and seize property equal to the same value here in India,” he clarified.

Explaining the Cenvat credit scheme, he said: “The period to avail credit has been extended to one year, which is a big relief for service recipients. However, the government seems to have gone back on its earlier promise, and there is a potential landmine in Rule 14, which needs re-drafting or else the taxpayer might pay a huge cost.” He added the scheme had not been made comprehensive, and that the construction industry will suffer as a consequence.

Several panellists urged the Finance Minister to ‘walk the talk,’ and implement the many positives of the Budget. Shailesh Haribhakti, Chairman of DH Consultants, an accounting and consulting firm, complimented the government’s efforts to bring back black money. A comprehensive new law, to deal with black money parked abroad, is to be introduced in the current session, and stringent measures would be announced to deal with black money, including 10 years rigorous imprisonment, a penalty rate of 300 per cent, among other measures.

Cracking down on black money would also help reduce borrowing, said Haribhakti, adding it would also ease the rate of borrowing. He said,“The government is effectively saying it will create an environment, get clearances and empower businessmen. It puts the onus back on us,’’ he told the gathering.

Atul Joshi, CEO, India Ratings and Research criticised the Budget stating that though the implications were positive for the banking sector, “and the large bank stocks have risen, we don’t know what will happen to the credit policy for small and mid size banks, on whom the Budget has been harsh.” He added that the Budget had been ‘absolutely negative’ for the bond market.