Budget Analysis: Best move was on savings & investment allowance says E&Y

Reacting on the Budget, Rajiv Memani, CEO and country managing partner of Ernst & Young said the surcharge of 10 percent imposed on super rich was more than what was anticipated.

He further adds the best news from the Budget was what he did on the savings side plus what he has done on investment allowance. Below is the verbatim transcript of his interview on CNBC-TV18 Q: As far as ax is concerned, royalty we have actually seen the taxes go up. Excise as was the expectation nothing has been done, customs not much has actually changed there. FM has done what everybody feared he would do and that is the tax on the super-rich in the form of a 10 percent surcharge. 10 percent is not something that people were expecting. They were expecting at least 5 percent, so 10 percent perhaps more than what was being anticipated? A: Yes that is more than what was anticipated. However, on Goods and Services Tax (GST) front, my personal view is I was expecting a more emphatic statement. There was a huge request that he made and the Central Sales Tax (CST) allocation is something that he owes to the state. All he is saying is that I have allocated Rs 9000 crore in the Budget. I am coming to the table you please come to the table. It is a good time for non-congress states also to come because now it can only be effective from 2014. So, if any other part was also to form the government everyone has got to benefit from this. In some ways this is the least controversial year to do it. On taxes side you are absolutely right and the biggest benefit was on investment allowance. He has tried to plug-in some on the royalty, most of the tax treaties there is a rate of 15 percent. But the rate in the Income Tax Act was actually 10 percent which is lower than 15 percent. In most countries, it will actually go up by 5 percent and not by 15 percent. They have also plugged-in share buyback and all the other things to some extent. However the surcharge both on super-rich and even on companies the surcharge has increased so effectively your tax rate has gone up by roughly 1.5 percent. On dividend distribution tax (DDT) it has gone up, it will also apply on Minimum Alternate Tax (MAT) and other things. So in some ways there has been an effective increase of tax rate and on surcharge for super-rich one was anticipating 5 percent, 10 percent seems to be on the higher side. The best news is what he has done on the savings side plus what he has done on investment allowance