This year’s annual budget needs to be a growth-oriented one, in line with the country’s economic outlook, a top American India-centric strategic and business advocacy group said on Tuesday.
The previous budgets were focused on pandemic recovery, but the current budget needs to be a growth-oriented budget, in line with India’s economic outlook, said Mukesh Aghi, president of the US India Strategic and Partnership Forum.
As the chair of the G20, India is one of the fastest-growing economies, a beacon of economic hope as other G20 economies face global headwinds, he noted.
India assumed the Presidency of the G20 for one year from December 1, 2022, to November 30, 2023.
“Investors will be eyeing the budget for economic cues and hence a robust, budget focused on growth, targeting PLI schemes for manufacturing investors, and targeting supply chain recovery is the need of the hour,” Aghi said.
Easier tax laws will boost investor confidence to attract significant FDI and signal a conducive environment for doing business while attracting significant capital inflows, particularly towards infrastructure development and in green energy, said the USIBC chief.
Last year, the US-India Tax Forum, which is a dedicated tax policy initiative of USISPF, presented collective industry recommendations on tax proposals for Budget 2023-2024 to the Ministry of Finance.
Its recommendations touched on advocating for a stable and predictable tax environment, improving the ease of doing business and compliance burden, and rationalisation of tax rates and tariffs.
According to Akhilesh Ranjan, Advisor, US-India Tax Forum, a former member of the Central Board of Direct Taxes, and Advisor, Tax and Regulatory Services at Price Waterhouse & Co LLP the Budget is likely to indicate a continued emphasis on predictability and stability of tax policy, with no major changes in the tax structure.
The Indian growth story
The focus on direct taxes will be on encouraging greater compliance through simplification and rationalisation of the law, more effective dispute resolution, and measures that contribute to building an environment of trust between the taxpayer and the tax administration.
An announcement on the implementation of the Pillar 2 global minimum tax should also be coming, he said.
USISPF said the Union Budget 2023-2024 will be presented at a time when major economies around the world are experiencing recessionary and inflationary trends.
However, the Indian growth story is expected to tide over global headwinds on the back of resilient domestic growth and recovery, post-pandemic.
The business community at large expects this Union Budget to bring in measures to trigger growth across sectors by bringing in tax efficiency measures, the USISPF said.
Budget 2023 is expected to put the economy on an accelerated growth path amidst global recessionary trends. Tax policy will be a critical lever in furthering the momentum of the ease of doing business, driving manufacturing competitiveness, and boosting investor confidence in non-residents. From a tax perspective, these three themes merit attention, said Naveen Aggarwal Partner, head of North India Tax, and US-India Corridor Leader at KPMG in India.
Mukesh Butani, Advisor, of the US-India Tax Forum, and Founder and Managing Partner of BMR Legal Advocates said 2023 Budget expectations have soared for many reasons.
It is the last budget before the 2024 general elections and the recent announcement by the Finance Minister that it will be set on the template to prepare India for the next 25 years, he said.
Amidst the global recessionary fears of volatile capital markets, a high-interest rate regime is likely to prevail in 2023. India’s position as having engaged a stable developing nature, coupled with robust tax collection, presents an opportunity to roll out proposals for growth in infrastructure spending, rationalisation of tariffs and pursuing deeper tax administrative reforms, which when combined, presents a holistic agenda, Butani said.
From a GST standpoint, though the overall roadmap for setting up the GST Tribunal seems to have been concluded by the Group of Ministers, the appointment and notification of members need to be fast-tracked.
Rate reduction on essential services like salons and insurance (health/ life) is another key ask, said Mahesh Jaising, Partner and National Indirect Tax Leader of the Indirect Tax Group at Deloitte.
Edited by Teja Lele