What should the new finance minister’s wishlist be like? Just as in the corporate world, the CFO of a nation plays a pivotal role in managing government finances and establishing tax and other policies.

Direct taxes

There can be no disputing the fact that tax rates have stabilised and have come to be accepted by a large community of tax payers — changes in rates have only been cosmetic.

The new finance minister would probably stick to the principle, “ If it ain’t broke, don’t fix it”. There is no point in rubbing voters the wrong way on this score.What the finance minister can and should do is to provide one major tax break to the salaried class. Owing to persistent inflation, the present value of the investment limits (and interest on housing loans) of ₹1,00,000 and ₹1,50,000 under Section 80C and 24B has more than halved in value. There is a strong case for a generous increase in limits.

Indirect taxes It should not surprise anyone if the new finance minister does minor tinkering with the Central Excise and Customs tariffs; this is more a result of habit than need.

One of the major achievements of the previous Government was to prepare a negative list of services to bring some sanity to service tax; the new government should, however, desist from adding to the negative list to please certain sections.

Much time, money and foreign visits have been spent on whether to introduce Goods and Services Tax (GST) into the country.

There does not seem to be much of a difference between the taxes that are to be subsumed into GST in their present form and the new levy. The new finance minister is best positioned to take an impartial view of GST and decide fast on whether it would be really a value-addition or not.

One of the major disappointments of the last government was its inability to take firm decisions on international taxation, as evidenced by the long-drawn-out battle on the Vodafone tax saga.

Though the safe harbour rules introduced later attempted to bring some sanity to transfer pricing, the need of the day is to instruct the lower administration not to issue arbitrary assessment orders. With transfer pricing now applicable to domestic transactions too, this becomes all the more necessary. Another area where the erstwhile government was very ambitious but failed was disinvestment in the government undertakings. One of the tasks of the finance minister would be to ensure that disinvestment targets are realistic and are need-based, not revenue-generation based.

Two former finance ministers have debated the manner of accounting for government subsidies. The incumbent finance minister should bring in transparency in this regard.

The incumbent cannot accommodate and satisfy all requests. As was the wont of the previous finance minister, it would probably be appropriate for the finance minister to end his Budget speech with a quote from the Thirukkural : “As and when the rare chance comes, seize it to do the rare deed.”

The writer is a chartered accountant

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