After presenting the last Budget of the UPA 2, it was Finance Minister, P Chidambaram's turn today to explain the proposals to India Inc. While he acknowledged the challenges that the economy faces, the finance minister was not in a mood to take up pleas from industry leaders to rationalise tax proposals.
The focus now is going to be engaging foreign investors and the finance minister will travel to Mumbai, Japan, US and Canada to hold meetings. More announcements are also expected in the reply to the Budget in Parliament- especially on rationalisation of withholding tax on debt instruments to 5%.
While addressing India's top corporates, finance minister, P Chidambaram said, "We are ready to play fair provided everyone plays fair."
This is a loud and clear message from the finance minister - "If you don't pay up your tax dues, be ready to face the taxman". After all, Chidambaram has promised to keep the fiscal deficit at 4.8% of GDP for FY14, and without adequate revenues, it will be impossible to bridge the deficit. Infact, at the industry interaction, the FM shot down pleas for reconsidering tax proposals, be it on SUVs or even the minimum alternative tax (MAT).
Ruling out the possibility of reconsidering MAT, Chidambaram said, "Diesel is subsidised. So the three percent increase in tax is for recovering subsidy. There is no discussion on MAT."
On the controversial retro clause from the previous year’s Budget, the finance minister said any changes on the clause will have to be vetted by parliament, and that can happen only after the Vodafone issue is resolved.
Chidambaram added, "Once we have clarity on how that case is resolved, then we go parliament.We can't go to parliament before the resolution of the tax issue."
However, one also saw some words of comfort with the FM assuring India Inc that he would continue to impress upon RBI Governor D Subbarao the need for a conducive interest rate regime. “I hope interest rates will come down. We have done what can be done on the fiscal front. I hope RBI will do what they have to do on the monetary front.
India Inc on the other hand is keeping its fingers crossed.
Naina Lal Kidwai, president, FICCI says, "We would like you to consider offering the investment allowance at 15% for all projects that involve investments in plan and machinery of a minimum of Rs 10 crore for two years as against the Rs 100 crore as catered in the Budget."
Adi Godrej, president, CII says, "One of the things is the power of arrest, that we think should definitely taken away."
All eyes are now on the reply of the finance minister to the Budget speech as well as the Finance Bill, where he is likely to incorporate changes that the Indian industry has suggested.