Simplification of tax system will help India economy on long-term basis: Analysts
Dubai - India's 2020-21 budget was quite balanced and simplification of tax regime announced in the latest budget will help the economy on a long-term basis, say analysts.
While addressing the Indian Union Budget 2020 conference held in Dubai on Monday, they said markets and investors should look at the Indian economy over the long-term basis - five to 10 years or beyond.
Tushar Pradhan, chief investment officer at HSBC Global Asset Management in India, said the budget set direction towards simplified tax regime which is in line with the country's bid to be a $5 trillion economy.
"Every individual or corporate should be part of the tax net and that is going to propel economy. Simplification is a big step. Some have argued that alternative tax regime is more confusing then before but we have to take it with a pinch of salt," he said while addressing the forum, which was organized by The Indian Institute of Chartered Accountants (ICAI) - Dubai chapter.
He noted that divestment target of Rs2,100 billion is too ambitious and the next year will be really tough one to meet fiscal deficit to match.
Paras Shahdadpuri, chairman of Nikai Group, said the market was expecting some sops for the industries but it was missing in the budget.
"There was a lot of expectations built around the budget, expecting some big bang and fireworks. But it didn't happen. Therefore, industry was disappointed. But, overall, budget is good as it did provide some stimulus," he added.
Anish Mehta, chairman of ICAI's Dubai chapter, said the government aimed to give more disposable income in the hands of individuals by introducing new tax slab under simplified regime in the budget.
"People, now, can choose between old and new tax slab depending on their savings appetite or not claiming various exemptions. However, this will discourage forced savings by individuals which is essential for sound financial position in times of crisis. Another measure which will impact the tax is taxing dividend distribution in the hands of the recipient rather than corporate. This may be beneficial to some but disadvantageous to tax payers who are in higher income group," he added.
He said people were expecting some relaxation on exemption of tax on long-term capital gains which could not find place in the budget 2020. "This could have boosted investments in capital market."
Anurag Chaturvedi, secretary of ICAI's Dubai chapter, sees it as a balanced budget with respect to an individual increased slab-based rates and options to opt new scheme of tax.
"Abolition of dividend distribution tax is bigger reform by the government. However, capitalists will have to bear burden of increased tax slab rates, additionally bringing stateless persons in to tax net and introduction of deemed residency provisions will impact NRI in general. It will force them to choose a tax domicile (Tax Resident of any country) outside India to avoid taxing global income in India," Chaturvedi said.
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