With Budget 2013 around the corner, members of India Inc, multinational companies and even individual taxpayers are cautiously optimistic. A survey by BMR Advisors and CNBC-TV18 reveals that the optimism centres around hope of further clarity and stability in the tax regime and the implementation of overdue reforms.
To explain the findings of that poll are Rajeev Dimri, leader-indirect tax, BMR Advisors, Gokul Chaudhri, leader-direct tax, BMR Advisors, Rajya Vardhan Kanoria, chairman and managing director of Kanoria Chemicals and Industries and Vinod Verma, president, European Business Group.
Below is an edited transcript of the show on CNBC-TV18
Q: What are going to be the key drivers as far as the finance minister's (FM) Budget agenda is concerned?
Dimri: I personally think that he needs to balance the Budget in terms of deficit but without necessarily cutting costs .
Q: But that is his objective. He intends to prune expenditure substantially,
Dimri: If the objective is to maintain the fiscal deficit, it cannot done just by cutting expenditure in the Budget because it eventually thwarts development plans vital for kick-starting the economy.
Q: Does he have the room to play Dr Feel-Good?
Chaudhri: I think it is quite clear as far as the FM is concerned and as to the mood of the people as indicated by our survey, there are no expectations of tax sops or tax holidays. All that people seek is clarity in tax provisions and rules .
Q: Is tax risk the number one risk that your clients are talking about at this point of time?
Chaudhri: Absolutely. Investors keenly looking at India from around the world today more concerned about the tax risk in India than the tax cost for doing business in India. I think that is something which the FM needs to recognise and address at the earliest.
Q: Do you see the FM amending retrospective amendments brought in in the previous Budget this time?
Verma: I welcome the FM's statements of going ahead with the Shome Committee recommendations .
Q: But do you see him going all the way?
Verma: Increased clarity is always good for business especially for European businesses looking to partner with Indian companies. They bring growth and employment and the least that can be done is is to provide a tax regime that is clear, certain and stable.
Q: Do you believe he is going to be able to write as many wrongs as he would like to from the previous Budget?
Kanoria: It is a difficult task. There is no question but I think there is a need to take risk beyond the normal Budgetary process.
Q: It cannot be business as usual.
Kanoria: It cannot be a business as usual approach, there has to be a strong signal that to do business in India, there will be a stable and a predictive environment. I think this gap between intent and interpretation has to be bridged. I also think that the FM will need to focus on the economic much more than on the financial aspects.
Q: Do you expect him to hike surcharges, bring in new surcharges, and hike the education cess ?
Kanoria: I think the surcharges should go. If there is a tax rate, the complexity of that tax rate should be reduced so that it is easy for the taxpayer to understand and pay the dues rather than go through a series of processes where he has to calculate tax for different items under different headings. So the taxpayer must be able to pay tax simply. I think administrative reform is a very strong signal that the FM can send in this Budget.