Budget 2021

‘Proposal to rationalise I-T structure can be a double-edged sword’

Mangaluru | Updated on February 02, 2020

The Budget proposal to rationalise the tax structure by giving the tax-payer the option to pay tax at reduced rates if deductions are not claimed, can be a double-edged sword, a professor from the Manipal-based business school, TA Pai Management Institute (TAPMI), has said.

Rajiv V. Shah, Professor (Finance Area) of TAPMI, said the proposal would simplify the returns filing activity and save manpower and energy on verification of claims of deductions.

However, it can also lead to a shift in the investing and saving pattern of the taxpayer, as current investments have the added benefit of tax savings built into the returns. This could possibly be replaced by other savings options, or even enhanced spending. While this could be beneficial in the short run, it could affect post-retirement corpus building activity, he said.

The focus on transport infrastructure development is welcome and needs to be pushed forward with vigour. This would lead to immediate benefits such as employment, and in the long run help develop the economy through reduced transportation costs and improved connectivity, he said.

Vishwanathan Iyer, Associate Dean (Academics) of TAPMI, said Budget 2020-21 is a bold, pro-middle class, pro-corporate and forward-looking Budget. The big message is that wealth creators will be respected. The Budget has taken bold moves such as raising the threshold for income tax, as well as the abolition of DDT.

Simplified GST norms, revisiting the Rule of Origin requirements and tightening of regulations relating to dumping of goods have benefited the MSME sector, he said.

The proposed partial divestment of LIC and IDBI should bring more retail participation in the market. The key thing to be kept in mind is that the Finance Minister has not allowed the fiscal deficit to spiral out of control. This should definitely boost business sentiment, he added.

Published on February 02, 2020

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