India Union Budget 2017: Experts help audience crack the code
Hard-hitting questions posed by those in attendance at Khaleej Times-organised event
Right after the panel discussion of the "Indian Budget 2017 - Managing the Future", there was an interactive session in which the audience got an opportunity to clear up certain issues.
Some hard-hitting questions on Swiss bank accounts, global taxation, Goods and Services Tax (GST) and healthcare expenses popped up in a lively interaction between the audience and the experts.
When moderator Shazia Ilmi opened the floor for questions, the first to shoot was Sudhir Kumar Shetty, COO of UAE Exchange.
"What will be the impact of the GST on the economy and the kind of revenue the government is expected to generate from it?"
Supreme court advocate and financial guru Homi Ranina took the question and said the GST will have a fantastic impact on the Indian economy. "The GST will bring in so much revenue for the government. India's GDP will rise from the current seven per cent to 8.5 per cent within the next year," said Ranina.
Throwing his full weight behind the demonetisation move by Indian Prime Minister Narendra Modi, Ranina said, in fact, one of the rationales behind demonetisation was the GST.
"If there is a parallel economy, then the GST will not succeed. The GST will make every trader accountable for his turnover."
Once the digitisation kicks in, people can use their Aadhar card, which will be linked to bank accounts, he said. "The customer can go to a shop and by giving his thumb impression, money will directly go into the account of the trader," explained Ranina.
The next question raised was on one of the biggest concerns of non-resident Indians: does the government have plans to tax NRIs? Ranina once again quelled such fears stating there was no such plan to tax the global income of Indians.
Shifting the debate from taxation to unaccounted foreign bank accounts, Elizabeth Vaz, an Abu Dhabi resident asked point-blank: "I want to know what is the status of Swiss bank account holders?"
In responding, Ranina was at his candid best. "The Swiss government is not going to give much information to us when the Swiss economy is dependent on this money coming into their accounts."
He went on to explain how bringing home the black money - an election promise of the Modi government - was not that easy. "Swiss banks accounts are rarely held in individual names. People float companies in tax-haven countries and they make investments."
He added that but the government has gotten into agreements with many countries including the UAE to make information flow easy, especially about NRI income.
That got a banker-turned-educationist from the audience worried.
"I was happy all along. But now I am all worried when you say information on NRI income will flow from the UAE to India. If there are no plans for global taxation, what is the purpose of getting the information of getting NRIs money abroad?", asked the resident. Ranina was quick to retort that as long as the money is from legal sources, there was nothing to worry about.
Dr Anshul, deputy CEO of Universal Hospital, raised concerns about skyrocketing expenditure incurred in the healthcare sector. He also wanted to know why corporates are taxed more and individuals less.
"Corporate tax has to be competitive in a globalised world. If the corporate tax rates are higher than other parts of the world, then companies will move out. In fact, we should reduce the corporate tax," Ranina said.
Jimit Devani, director of Deloitte, Haskins & Sells, said India has one the lowest personal income tax rates.
"World over, companies are taxed in the rate of 20 to 25 per cent. Personal tax is as high as 40 to 45 per cent in some Western countries while we are taxing at 30 per cent."
Breaking down the tax equation, the experts said the income tax paid by an average Indian is not even five per cent of his or her actual income.
"If you take into account all deductions and exemptions, an average Indian does not pay more than 10 to 12 per cent of his total income as tax. All over the world people pay have to pay tax when you earn the income and when you spend," said Ranina.
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