Luthra & Luthra Direct-Tax Partner S.R. Patnaik talks about his expectations from the upcoming Budget-Session, concerns as a tax-lawyer and expectations of the general public..Market experts are demanding clarity in tax on long-term gains under the proposed Direct Tax Code and clarity towards introducing the Goods and Services Tax, amongst other key measures in the upcoming Budget. Stock markets have fluctuated causing concern over rising inflation and dipping confidence amongst the public altogether with a series of disturbing scams out in the open..Bar & Bench spoke to S.R. Patnaik (pictured), Partner Direct Tax, Luthra & Luthra on expectations from the upcoming Budget as a tax-lawyer and as an individual..B&B: What do tax lawyers want from the budget? .S.R. Patnaik: There have been a lot of uncertainties regarding the time and manner in which “Goods and Service Tax” and “Direct Tax Code” will be introduced into the Indian tax system. The Direct Tax Code 2009 was released on August 12, 2009 and was proposed to be implemented from April 01, 2011. After receiving recommendations from various industry groups and experts, a revised Direct Tax Code Bill 2010 was introduced in Parliament on June 15, 2010 wherein the date of implementation was pushed back to April 01, 2012. The said Bill is presently being reviewed by the Standing Committee. It may be noted that with every new draft, substantial changes were introduced. This has resulted in a lot of uncertainties as far as the business community, the investor community, the professionals and tax advisors and general public are concerned, regarding the form and manner in which the Direct Tax Code is going to be introduced..Regarding implementation of Goods and Service Tax, there have been a lot of discussions between the stakeholders including the Central and State Governments. However, the introduction of GST has become mired due to lack of consensus on some issues. Moreover, introduction of the tax would also require constitutional amendments, which requires a lot of work to be done before it can be formally rolled out. The Finance Minister should make a categorical statement of intent clearly laying down a road-map indicating the time-lines for the various steps involved..It is imperative that the Finance Minister provides a definitive direction and impetus to these two major tax legislations so that people could plan their future business activities taking into account the actual tax implications rather than indulging in hypothesizing about the future tax implications and working on several permutations and combinations. These are the most significant tax reforms being introduced since Independence, and a lot of good work has already been carried out. The DTC and GST should be implemented in a time bound, efficient and structured manner..B&B: What will be the expectation from the budget from a general public point of view?.S.R. Patnaik: Food inflation has been hovering in double digits for more than 6 months now. To add to this, the turmoil in Egypt and also in certain oil rich Middle East countries, has pushed the crude oil price beyond $120 per barrel which is expected to further drive up inflation. Under these circumstances, the Finance Minister is widely expected to provide some relief to the general public. However, having missed the dis-investment targets for the year, the Finance Minister would also be constrained in keeping the fiscal deficit under control. Thus, he will have to do a fine balancing act..There is also a necessity to further augment investment in public infrastructure. Thus, certain tax incentives may be granted to the infrastructure sector, and in order to encourage public participation, the overall cap of Rs. 1 lakh on deduction under Section 80C (and the additional deduction of Rs. 20,000 available under Section 80 CCF) of the Income Tax Act may be further increased. Due to increase in the cost of education and medical treatment, some additional benefits may be provided by way of increase in the relevant deduction limits, to provide some solace to the public at large..B&B: What do you foresee on the indirect tax front, as far as the Budget is concerned?.S.R. Patnaik: The Economic Survey released by the Finance Ministry has assessed the risk of double-dip recession as very low. Hence, there could be a roll-back of the reduction of Central Excise and Service Tax duty rates effected as a part of the fiscal stimulus measures undertaken by the Government when the threat of economic turn-down was looming large.
Luthra & Luthra Direct-Tax Partner S.R. Patnaik talks about his expectations from the upcoming Budget-Session, concerns as a tax-lawyer and expectations of the general public..Market experts are demanding clarity in tax on long-term gains under the proposed Direct Tax Code and clarity towards introducing the Goods and Services Tax, amongst other key measures in the upcoming Budget. Stock markets have fluctuated causing concern over rising inflation and dipping confidence amongst the public altogether with a series of disturbing scams out in the open..Bar & Bench spoke to S.R. Patnaik (pictured), Partner Direct Tax, Luthra & Luthra on expectations from the upcoming Budget as a tax-lawyer and as an individual..B&B: What do tax lawyers want from the budget? .S.R. Patnaik: There have been a lot of uncertainties regarding the time and manner in which “Goods and Service Tax” and “Direct Tax Code” will be introduced into the Indian tax system. The Direct Tax Code 2009 was released on August 12, 2009 and was proposed to be implemented from April 01, 2011. After receiving recommendations from various industry groups and experts, a revised Direct Tax Code Bill 2010 was introduced in Parliament on June 15, 2010 wherein the date of implementation was pushed back to April 01, 2012. The said Bill is presently being reviewed by the Standing Committee. It may be noted that with every new draft, substantial changes were introduced. This has resulted in a lot of uncertainties as far as the business community, the investor community, the professionals and tax advisors and general public are concerned, regarding the form and manner in which the Direct Tax Code is going to be introduced..Regarding implementation of Goods and Service Tax, there have been a lot of discussions between the stakeholders including the Central and State Governments. However, the introduction of GST has become mired due to lack of consensus on some issues. Moreover, introduction of the tax would also require constitutional amendments, which requires a lot of work to be done before it can be formally rolled out. The Finance Minister should make a categorical statement of intent clearly laying down a road-map indicating the time-lines for the various steps involved..It is imperative that the Finance Minister provides a definitive direction and impetus to these two major tax legislations so that people could plan their future business activities taking into account the actual tax implications rather than indulging in hypothesizing about the future tax implications and working on several permutations and combinations. These are the most significant tax reforms being introduced since Independence, and a lot of good work has already been carried out. The DTC and GST should be implemented in a time bound, efficient and structured manner..B&B: What will be the expectation from the budget from a general public point of view?.S.R. Patnaik: Food inflation has been hovering in double digits for more than 6 months now. To add to this, the turmoil in Egypt and also in certain oil rich Middle East countries, has pushed the crude oil price beyond $120 per barrel which is expected to further drive up inflation. Under these circumstances, the Finance Minister is widely expected to provide some relief to the general public. However, having missed the dis-investment targets for the year, the Finance Minister would also be constrained in keeping the fiscal deficit under control. Thus, he will have to do a fine balancing act..There is also a necessity to further augment investment in public infrastructure. Thus, certain tax incentives may be granted to the infrastructure sector, and in order to encourage public participation, the overall cap of Rs. 1 lakh on deduction under Section 80C (and the additional deduction of Rs. 20,000 available under Section 80 CCF) of the Income Tax Act may be further increased. Due to increase in the cost of education and medical treatment, some additional benefits may be provided by way of increase in the relevant deduction limits, to provide some solace to the public at large..B&B: What do you foresee on the indirect tax front, as far as the Budget is concerned?.S.R. Patnaik: The Economic Survey released by the Finance Ministry has assessed the risk of double-dip recession as very low. Hence, there could be a roll-back of the reduction of Central Excise and Service Tax duty rates effected as a part of the fiscal stimulus measures undertaken by the Government when the threat of economic turn-down was looming large.