Budget 2017 - Has goal in sight...gets consumer to fly high
Tax Partner, EY India
In the backdrop of the expected implementation of GST in July 2017, there has been a conscious effort to avoid major changes in the current indirect tax rate structure in the Budget 2017 announcements.
While there was a concern that Government could increase the service tax rates to align with the proposed rate structure under GST regime, consumers can heave a sigh of relief that the same continue to remain unchanged at 15%. This is a welcome move and all eyes would now be on the rate structure for services under GST, as to whether the same would be inflationary or otherwise.
On GST, Mr Arun Jaitley has reiterated that the preparation of IT system for GST is on track. With an intention to bring out much required awareness of the GST regime, there was specific reference of proposed extensive reach out programme to trade and industry for GST which will commence from 1st April 2017.
While the Budget Speech of the Finance Minister was silent on the tax rates for tobacco and tobacco products, cigarettes etc, the Annexure to the Budget Speech clarified that there has been an increase in the excise duty rates for the ‘sin goods’. Cigar, Cheroots, Cigarillos, paper rolled biris etc would thus be costlier post the Budget – this change is on expected lines.
To incentivise Make in India, all parts for use in the manufacture of LED light / lamps have been provided a concession in applicable excise duty. Similar waiver from central excise duty has been provided to certain inputs for use in the manufacture of RO membrane element for household type filters.
While a higher duty has been imposed on import of Silver medallion, silver coins etc making the same costlier, import of Liquefied Natural Gas would now attract a reduced Basic Customs duty.
Residential Post Graduate Programmes in Management provided by IIMs enjoy service tax exemption. The said benefit of exemption has now been extended to non-residential programmes conducted by IIMs. This is a beneficial move and would encourage participation in such programmes.
Last but not the least, as expected, the impact and benefits of Demonetisation clearly was one of the key talking points in the Budget Speech. Government strongly believes that demonetisation and GST would have an epoch making impact on our economy and people at large. It is expected that the surplus liquidity in the banking system will lower borrowing costs and increase the access to credit. The need for digital economy for speed, accountability and transparency has been identified as one of the ten distinct themes to foster the agenda of ‘Transfer, Energise and Clean India’.
To promote cashless transaction and promote domestic manufacturing of devices used thereof, exemption has been provided on Finer Print Reader / Scanner , Iris Scanner , Micro ATM ( as per standards version 1.51) etc and parts / components thereof. Also Service charge on e-tickets booked through IRCTC has been withdrawn.
Well!!! Clearly time to go Digital as cashless transactions would be the theme of the future. As India at large awaits the next steps on GST implementation, a special mention of the parting words of the FM which sums up the aspirations of the Government and Trade at large: “When my aim is right, when my goal is in sight, the winds favour me and I fly”.