Statement from Sachin Menon, National Head of Indirect Tax, KPMG in India
It seems the focus of the budget is to address the fundamental issues plaguing agriculture, infrastructure (Roads, Rail, power), banking and social sectors. The government expenditure in these sectors would kick start economic activity in the midterm. While there has been no major policy announcement like GST, a number of measures have been taken from an ease of doing business perspective in the form of rationalization of Credit rules, introducing provisions for faster dispute resolution, etc.
Also, in line with the Make In India initiative, changes have been made in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of certain domestic industries like Information technology hardware, capital goods, defence production, etc.
On the flip side, instead of abolishing Swatch Bharat cess to as a precursor to GST, an additional new cess by the name Krishi Kalyan Cess is proposed to be levied @ 0.5% on all taxable services (whose credit would be admissible for payment of output cess), taking gross service tax to 15% from 1 June 2016 onwards. The widely expected increase in service tax rate to 16% did not figure in the budget proposals.
Last but not the least, as against the industry expectation as regards concrete announcement on roadmap for GST, no specific timeframe has been committed by the FM , may be because it is beyond his
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