| | |
Dinesh Kanabar, deputy CEO and chairman - tax, KPMG, while analysing the possibilities of new taxes in Budget 2013 on CNBC-TV18, explains that widening of taxes and enactment of GST Bill are likely in Budget 2013.
Dinesh Kanabar, deputy CEO and chairman - tax, KPMG, while analysing the possibilities of new taxes in Budget 2013 on CNBC-TV18, explains that while there may be only an incremental tax levied on the super-rich, the widening of various taxes to include services and categories hitherto ignored and the enactment of the GST Bill in Parliament were the most likely proposals to be included in Budget-2013.
Below is an edited transcript of the analysis on CNBC-TV18
Q: Do you think the Parthasarathi Shome - P Chidambaram team in North Block will introduce new taxes?
A: All over the world governments have raised the level of taxes and introduced a super slab for the super rich. Much has been discussed on the levy of inheritance tax and according to a statement supposed to have been made by the finance minister on the floor of the Rajya Sabha, the past experience of the government has shown that that estate duty really did not generate too much of revenue and in fact the cost of administering the estate duty was more than the revenue collected.
The finance minister was reported to have assured, on the floor of Rajya Sabha, that there would not be any introduction of inheritance tax. So it remains to be seen if the tax will be levied or not.
Q: Do you believe the government may impose a tax for the super rich?
A: Such a move could be initiated like for example, the widening of the Gift Tax Act which despite being abolished rules that a person who receives a gift is deemed to have received an income barring certain exceptions. So, similarly one could see a widening in a variety of taxes.
The base of the Service Tax has already been widened. In Budget-2012 itself the government moved to rule that unless a service was excluded, all services would be subject to a levy of service tax. It remains to be seen if certain services that were kept out would be included within the service tax bracket.
Q: Will the government tinker with the service tax rate this time around?
A: Even today, there is a gap between the median rate of the Goods and Services Tax and the actual service tax levied. Pranab Mukherjee, after the introduction of Budget-2012, said at a chambers of commerce meet, that the increase from 10 percent to 12 percent was a step towards the median rate and therefore there was a raise in the rate of service tax. So, again, I wouldn't be very much surprised. That has huge potential.
A question also remains of the government's ability to fast-track the introduction of the Goods and Services Tax because that has the potential of substantially widening the tax base.
Q: What is your opinion regarding the introduction of the Goods and Services Tax because December 31 is the deadline for the committee to submit its report as far as the Goods and Services Tax (GST) is concerned? There has been no news on that so far. Do you believe that we could see the finance minister make a credible announcement on GST?
A: It is not about the finance minister making a credible announcement. The question is whether Constitutional Amendment Bill can be passed. The finance minister has been keen on doing everything and more to introduce the GST and it remains to be seen if his efforts will bear fruit.
In earlier discussions, Sushma Swaraj of the BJP and other members of the Opposition, have agreed to set aside political differences and support the Bill. So, if everybody does come together, I wouldn't be surprised if the GST Bill is enacted soon.
Q: So will there be another higher slab as far as income tax is concerned to target the super rich?
A: I don’t think the rate itself will be expanded. The current rate of 30 percent is something that has been achieved after a considerable length of time. Probably the government could levy in addition to the maximum marginal rate an incremental rate of 10 percent. That is more likely to be on the cards than anything else.
ADS BY GOOGLE
video of the day
Revival seen only post 5 quarters; like PSU banks: Emkay