Budget 2016: Ease of doing business with GST
Dated 19th February, 2016
The year, 2015 was a very positive year for the Indian economy and it signalled towards sustainable growth. As per the World Bank report, India now ranks 130 out of 189 countries in the ease of doing business which is a further boost. Several positive initiatives were taken such as eliminating the requirements for a paid-in minimum capital and a certificate to commence business operations significantly streamlining the process for starting a business. Adding to this, investments grew in the country with a nod to FDI.
The steady growth of IT sector has been associated with favourable policy initiatives, the Indian Information Technology sector is expected to grow 11 per cent per annum and triple its current annual revenue to reach US$ 350 billion by FY 2025. What is little worrisome are speculations about the global footprint of this sector potentially shrinking in short term along with emerging competition from other developing countries in attracting investments into the sector.
On the Tax side, considering the existing scenario on tax evasion and other tax related concerns, hopes from budget 2016-17 will soar high with respect to bringing a healthy and robust tax regime in India. Setting up of a strong and flawless tax regime should be a major goal for government in this year’s Budget. The government must bring in measures to revive industrial growth and facilitate a smooth transition to the new indirect tax regime. Implementation of GST as per the deadline will mostly result into a lower service tax rate and ease the way we do business and create grounds for innovation. Additionally, India has one of the lowest IT penetration rates as under 20% so we are expecting some sort of relaxation on import duties. This move will definitely help in IT penetration and increase affordability by a lot of SMEs.
Last year’s budget showered lot of promises around Digital India initiative to transform India into a digitally empowered society, it will be interesting to see the progress we have made so far in this budget. We feel that there is still a lot that needs to be established and a stronger assimilation of technology, innovation and infrastructure in our country will surely help us in doing so. Hence, hopefully this budget will surely have plans to bring in more budgetary benefits to these projects further boosting accessibility and opportunities for businesses in India. This will also need heavy investments to be made by the government on promoting R&D in India to encourage innovation and come up with newer technologies. Investment allowances for IT adoption must also be made to promote India as a premiere destination for both hardware and software development.