By Rajeev Dimri,
"Budget 2020 focuses on ‘Aspirational India’, ‘Economic Development’ and ‘Caring Society’, providing emphasis on agricultural, healthcare, solar, education, infrastructure sector, etc.
From an overview of the budget speech, government seeks to embrace broader goals of liberation of technology and electronic movement, boost to government’s Make in India initiative by laying down additional customs duties, face-lifting personal income tax laws and incentivizing investment in infrastructure and notified sectors.
Impetus through a new scheme, is proposed to be given to indigenous electronics manufacturers for mobiles, semi-conductor packaging and electronic equipment along with medical devices. This should help India in generating foreign investment and employment opportunities. Much anticipated encouragement to farming community, through support for building advanced infrastructure for solar power generation, is a welcome move.
Introduction of Vivaad se Vishwas Scheme, in line with the Sabka Vishwas Scheme, for Direct tax dispute resolution, is a welcome move. The details would need to be analyzed. Aside this, Institution of tax charter in statutes seems to be introduced for direct taxes, this would be helpful for taxpayers to reduce tax harassment by officers and instill confidence in the bigger tax payers. It should be made applicable to indirect taxes as well.
From an indirect tax perspective, the Union Budget has again laid focus on its key agenda of “Make in India” and “Ease of doing business”, with an increase of customs duty on certain sectors like healthcare. This has also been supplemented with the withdrawal of exemptions or increase in rate of customs duty, on import of certain electronic goods. Changes in the Customs sphere seem to align country’s policies with global norms, set in the current environment."
(The writer is Partner and Co Head, Tax, KPMG in India)
By Naveen Aggarwal,
"Debut budget of the decade offers some transformative ideas with a focus on PPP, skills-led job creation, propelling agriculture and driving the new wave of technology enabled governance and growth. Abolishment of DDT and time bound dispute resolution scheme for direct taxes will drive certainty, build trust and make a compelling case to attract fresh foreign investments. What is needed now is for the Government to ace the implementation!"
(The writer is Partner, Tax, KPMG in India)
By Himanshu Parekh,
"The Finance Minister stepped up to present Budget 2020, in the backdrop of a low GDP growth rate and sluggish economy. The main thrust of the Budget was around health & well-being, infrastructure development and ease of doing business. The Finance Minister announced slew of proposals on the direct tax front. One of the proposals is in relation to rationalization of personal income tax rates along with removal of exemptions / deductions. Further, as a welcome move, it is also proposed to abolish DDT and fall back to the historical method of taxing dividends in the hands of the shareholders. In order to provide a boost to the start-ups, the taxation of ESOPs in the hands of the employees of start-ups has been rationalized. It is also proposed to introduce “Vivaad se Vishwas” scheme for settlement of pending direct tax disputes. Directionally, it is a good budget aimed at stimulating growth, simplifying the taxation structure and minimizing administration."
(The writer is Partner and Head, Corporate and International Tax, KPMG in India)
By Manish Aggarwal,
"From infrastructure standpoint Budget 2020 made an attempt to re-iterate the government’s commitment to kickstart investments. It provided equity infusion of 22,000 cr in IIFCL and a new NIIF floated NBFC to address financing concerns and provided a way to have more of sovereign funds investments by offering capital gains tax exemption. However, the government did miss a huge opportunity to address structural challenges such as creation of dispute resolution forum & long term development financing institution, undertaking distribution reforms, and re-constructing the PPP architecture which was what market was expecting."
(The writer is Partner and Head, ‘Infrastructure M&A, and Special Situations Group, KPMG in India)
By Nabin Ballodia,
"The budget provisions have laid specific impetus on clean energy & power. The direction to increase the national Gas grid From the present 16,200 KM to 27,000 KM indicates the direction of the government to move towards cleaner fuel.
Building of solar power capacity along the railway track in railway owned lands as well as the support to farmers to set up solar power facilities connected to the grid would help additional power generation.
Moreover, the confirmation by the finance minister to provide the confessional income tax rate of 15% on new power producing companies would provide an impetuous to the new power companies. In addition, the removal of Dividend Distribution tax would also boost the foreign investment in the sector.
A fairly strong budget which touches most of the key aspects around infrastructure, spending, ease of living, boost to employment and industry. Removal of Dividend Distribution tax, extending concessional tax rates for new power producers and the attempt to reduce direct tax disputes under ‘Vivaad se Vishwas’ scheme would go a long way to build up the investors confidence."
(The writer is Partner, Tax, KPMG in India)
By Waman Parkhi,
"The budget speech focused on many areas from horticulture to quantum technology. It spoke of newer avenues of non-tax revenues like monetizing 6000 kms of roads or divesting government holdings in LIC. Citizens charter for tax departments was introduced in 90s but now it is proposed to be put into the law and would definitely have more impact. Use of technology in improving ease of doing business like faceless appeals would further add to the benefit of taxpayers."
(The writer is Partner, Indirect Tax, KPMG in India)
By Vivek Gupta,
"Infra investments up to March 2024 from foreign sovereign wealth funds to enjoy zero tax on interest, dividend and capital gains. Big step to boost infra investments in the short term.
DDT removal was expected. Moving to globally accepted regime of shareholder taxability for dividends is also equitable and benefits most taxpayers, including MNCs. However, promoter owners holding equity individually or in trusts may be adversely impacted, particularly when they are in the 43% tax bracket"
(The writer is Partner and National Head, M&A and Private Equity, Tax, KPMG in India)
By Sanjay Doshi,
"LIC IPO will increase penetration of the new and recent insurance segment in capital markets. Also support to NBFC’s pretty marginal, no major impetus for housing or housing finance."
(The writer is Partner, Deal Advisory – Financial Services, KPMG in India)
By Anish De,
"Big tax benefits for power generation that will help IRRs go up or cost of power to come down due to 15% tax rate for power generation investments has been announced. Also, the exemptions for sovereign wealth funds will be a great boost to large infra and will attract long term low cost funds. The fine print on the tax rate reduction needs to be seen to understand the segments benefitting and the conditionalities.
Big push for solar power for farming and for fallow lands by extending the Kusum scheme. This could potentially result in 10-15 GW of new capacity creation if it materializes. This will be a big push for farmer’s income, but will in turn require lesser demand for grid scale power, targets for which then should be adjusted downwards.
The one thing that could work well if executed right is solarisation along rail tracks. This should not be limited to traction load alone but feed into the Discoms. Some announcements have been made on smart meters and choice for customers to choose suppliers. These are significant matters that can change the electricity sector structure and operations. More details are needed to assess how it would play out."
(The writer is Partner and Leader for Energy and Natural Resources KPMG in India.)
By Santosh Kamath,
"The push to solar power (PM Kusum Scheme) in the agriculture sector is positive and builds on what has been started earlier. This will bring continuity and consistency in this program and can be transformational to the agriculture sector over the years.
Prepaid smart metering and freedom to choose power supplier will lay the ground to bring competition in the power sector and give consumers a choice
Reduction in corporate tax rate to 15% for new power generation will help new investments in renewable generation particularly. This will provide a big boost for this sector."
(The writeris Partner and Leader, Alternate Energies, KPMG in India)
By Sumit Goel,
"While allocation to health has just been increased by 6% over last year’s outlay to Rs 69,000 cr, allocation to government’s flagship scheme PMJAY has remained at Rs 6,400cr. To improve accessibility under PMJAY, a welcome step to introduce viability gap funding mechanism for setting up hospitals in 112 identified aspirational districts.
Since significant out of pocket expenditure happens in out-patient settings, the budget proposes to further strengthen Jan Aushadhi Scheme by providing 2000 drugs and 3000 surgicals at very affordable prices thus reducing burden on the common people.
To keep up with times and harness the potential which AI and ML offers in healthcare, budget proposes to explore using AI under PMJAY scheme. To address significant gap in availability of doctors, the budget proposes a much awaited initiative to set up medical colleges attached to district hospitals under PPP mode and to make it attractive, also proposes viability gap funding. Since the details are yet to be worked out, it is hoped that the proposed mechanism will be attractive enough for many players to participate. The funding will be from the taxes on medical devices
Budget also proposes a very welcome step to further enhance deployment of much in demand Indian nurses abroad by proposing to introduce bridge courses and specialized training packages to augment skills and establish equivalence as per the requirements of the respective countries."
(The writer is Partner, Healthcare Advisory, KPMG in India)
By Jaideep, Ghosh,
"Continued emphasis on infrastructure, energy, education, healthcare will boost the economy over a long term. National Infrastructure Pipeline projects worth US$14 trillion, if implemented on a timely basis, would be a game-changer. Special focus on technology, connectivity and digital areas are very timely.
Continued emphasis on investments in transport infrastructure, education and digital areas would boost tourism and hospitality sector, which currently faces challenging economic situation. Grants to states for specified tourism initiatives, development of heritage sites and museums are welcome steps. Would expect the investments proposed in tourism, however, to be upped in the coming years.
Transport infrastructure is the backbone of our economy. Mega investments of US$25billion allocated to transport infrastructure covering roads, railways, aviation, inland waterways, and maritime as a part of National Infrastructure Pipeline projects, if implemented on a timely basis, could be a game-changer. National Logistics policy expected soon will be a critical catalyst for growth."
(The writer is Partner, Travel, Hospitality and Leisure, KPMG in India)
By Raman Sobti,
"Good measures to promote manufacturing- export districts, 100 airports, mobile manufacturing, medical equipment etc. Great finance benefit 1. factor regulation act amended - brilliant move. 2. Subordinate debt to be provided by banks as quasi equity. Also one more year of restructuring proposed to RBI will benefit in improving financial health. So good focus on the financial health of MSMEs."
(The writer is Partner and Head - Enterprise Practice, KPMG in India)
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