India’s finance minister Nirmala Sitharaman will present her second budget on 1 February 2020. Unlike when she presented her first budget last year which came when nearly a quarter of the year 2019-20 was over and which came in the backdrop of the interim budget which the then finance minister Goyal who had made liberal announcements in the area of tax rates, this time around the challenges before her are multifold and way too serious. The economy has stagnated (the government is avoiding to call it recession taking advantage of the classical definition of a recession – decline for three straight quarters.. etc), unemployment rate and rate of inflation are high and consumption in urban and non-urban areas has seen a serious slide indicating lack confidence about the economy among consumers.
While the corporate sector is grappling with ways to deal with the slowdown in demand, there are certain remedies that the industry captains think can work in the current situation. Here are a few of them:
Yogesh Patel, Chief Finance Officer, Mahindra Logistics Ltd.
“We would urge government to bring fuel under GST. This will help in getting standarisation in the sector and provide cost effectiveness. We also expect Government to simplify the GST administration across, including enabling online real time reconciliation, input credit ability and optimum utilization of credit ledgers. We wish that the Finance Minister ensures Streamline labour laws and remove restrictive laws like mathadi.”
Ms. RM Vishakha, MD & CEO, IndiaFirst Life Insurance
“The upcoming budget is anticipated to be consumer-focused. We hope that the 80C tax benefit is enhanced from the current Rs 1.5 Lakh. Additionally, for greater focus on risk management across protection and long-term savings, a specific 80C sub limit solely for life insurance is desirable. Government needs to emphasise on increasing domestic consumption to bring back the growth momentum. For an individual, the income tax exemption limit can be raised from the current limit of Rs 3 lakh. This will provide a boost to the middle-income and lower-income population. Another area that could be further enabled is that of pension and retirement by moving annuity pay-outs into an EEE regime (Exempt Exempt Exempt) regime from the current EET (Exempt Exempt Tax) structure”.
Kamal Nandi, President – CEAMA and Business Head & Executive Vice President – Godrej Appliances:
“Initially, large appliances and electronics were in the highest GST tax slab. Post GST revision, the tax rates were reduced for most, barring Air Conditioners and large screen Televisions, which continues to be in the highest tax slab of 28%. Lowering the tax slab to 18% would help offset the price pressure and spur demand for both Air Conditioner (Split and Window) and Television (above 32 inches), as both have a huge opportunity for volume growth. The reduction in tax slab would help in improving affordability among customers and attracting investments in component manufacturing. This will also help in penetrating the market, especially for AC category. Since AC is no more a luxury but an item of basic necessity. Lowering the GST tax slabs for eco – friendly and energy-efficient products like Air Conditioners (4*, 5* Window AC and Split AC inverter models) and Refrigerators (Direct Cool and Frost Free) to 12%, will drive demand and increase the adoption of sustainable appliances by Indian consumers. The upcoming budget should additionally offer incentives for manufacturers to produce these energy-efficient products which will be in line with the governments focus on sustainability.
