Budget 2016: It's not all that great; here are a few missing links in Jaitley's budget - Firstpost

Budget 2016: It's not all that great; here are a few missing links in Jaitley's budget

The much-awaited Budget 2016 from the Modi government is out. Unlike the tipping of the FM’s hat towards women and women’s issues in the previous budgets like Rs 200 crore for safety of women on public road transport in interim budget in 2014,  adding Rs 1000 crore to the Nirbhaya Fund in 2015, women find no mention in the 2016 budget.

Experts across sectors listed some of the other missing gaps in the  budget:

India's accounts locked in an attache. Image courtesy CNN-IBN

India's accounts locked in an attache. Image courtesy CNN-IBN

Tax holiday for start-ups: Finance Minister Arun Jaitley announced 100 percent deduction of profits for three out of five years for start-ups set up during April 2016 to March 2019. Very few startups make profits in the first two to three years of their operations, said Bamasish Paul, CEO and Co-Founder, Healthenablr India Pvt Ltd. He said he was uncertain of the 'real benefits' of the proposed tax holiday to startups as a result. It would be difficult for start-ups to avail of such benefits at the time of tax assessment given the set-up requirements, he added.

Capital gains tax for unlisted firms: The FM should have considered treating investments by AIFs and angel groups in unlisted companies and aligning it with the public market equity tax regime, say some start-up founders. Saurabh Srivastava, Co-Founder, Indian Angel Network, said, “This would end discrimination against domestic venture capital funds ( AIFs) as foreign funds anyway pay no capital gains tax by investing from Mauritius and other treaty friendly countries.”

Disincentive to mineral oil production: The proposal to discontinue tax holiday on commercial production of mineral oil for blocks starting production on or after 1 April 2017 could prove to be a disincentive since the blocks offered in NELP rounds were promised a 7-year tax holiday, says Raju Kumar, Tax Partner – Oil & Gas practice, Ernst & Young (EY).

10 per cent tax on dividends: An additional tax of 10 percent on dividends in excess of Rs 10 lakh and increase in Securities Transaction Tax (STT) on options, is a dampener for the markets, says Girish Vanvari – Partner and Head, Tax at KPMG in India. He feels that the introduction of Amnesty scheme can be questioned.

Rise in cost of telecom services: Service tax on spectrum fees will increase the cost of providing telecom services, and will hit telecom companies and the quality of service, says Sachin Menon – Partner and Head, Indirect Taxes at KPMG in India.

Lack of action plan on education:  The latest Annual Status of Education Report (ASER 2014) shows that while school enrolment is high (96.7 per cent), learning outcomes are alarmingly low. One out of two students in grade 5 cannot read text of grade 2 level. About 55.9 per cent of class 8 students cannot do simple division. The government needs to focus more on quality not just quantity, says Pradeep Singh, CEO and Co-Founder, Vidyanext. “While the budget has welcome initiatives to increase educational reach across the spectrum, what is missing is an action plan to simultaneously improve learning outcomes. One solution is to help teachers become more effective by giving them easy-to-use technology tools that help students learn better. This will serve the twin goals of improving learning outcomes while simultaneously ensuring digital literacy for the new generation,” said Singh.

No change in healthcare spend: The health-care sector has an intense demand-supply gap but yet the government has not done much for it, says Vishal Bali, Chairman and Co-Founder, Medwell Ventures. There is no fundamental change to increase public healthcare spending and give it the necessary boost towards 2 per cent of GDP. “The budget is silent on Universal Healthcare coverage agenda which has been often discussed by the government. The non communicable diseases (NCD) epidemic in India has not been given any attention towards increased allocation.

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