Union Budget 2015: Expect FM to increase service tax rate, says Wadhwa

I would like to see tax incentives supporting each of these, so for Made in India clearly accelerated depreciation, investment allowances, new economic clusters, backward area tax concessions’ in term of fiscal deficits. I have absolutely not doubts that there is going to be rise in service tax because how else is the government going to increase its revenue and on the last issue of consumption, I do want to see how and what government can do even if it is small, even if it is token, even if it just by way of an indication to say I recognise demand has contracted, I need to provide a little greater support so even if they can provide some concession on excise duties, that will be a very welcome step.

Sonia: A lot of these SEZs have lost their charm because whatever concessions are given on SEZs are taken back in the form of MAT. So, that clarity is expected in this Budget. Do you think that the government has the leeway or the fiscal space to give more tax sops to SEZs for the Make in India theme?A: If you want to provide a concession, provide it for the defined period, do not try and brink in legislation back door to then try and reduce the benefit and the impact of that concession. This is where our investment cycle and confidence in investment has really suffered. People plan on the basis if five years and honestly they way minimum alternate tax (MAT) was introduced first on everything, then on capital gains tax, then on infrastructure, then on SEZ, the whole concession is seriously diluted. You know what you are doing? You are actually destroying the confidence of the investing population by bringing in back door taxes having offered concessions upfront. So, my serious advice to the Finance Minister at this stage would be, if you do not want to provide a concession, you can be quite forthright about it and say I do not have flexibility within my revenue collection cycle to provide that but having provided it please stay for it. You have a mandate for a period of five years; you are going to be the Finance Minister of this country for five years, you can actually plan things for once for a five year period so at least during your regime do not create that inconsistency and do not withdraw concessions that you give and indeed if Made in India and SEZs and infrastructure has t be successful you have to do something about either reducing because you may not have flexibility to withdraw but you have to at least show that you are prepared to reduce and hopefully at some stage withdraw so that enough money is left with the companies to reinvest in the businesses for which they are being set up.

For entire interview watch accompanying videos.