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6 tax issues the Finance Minister needs to address in Union Budget 2014-15
Finance Minister Arun Jaitley is expected to present the Union budget for 2014-15 this year in July. It's likely that a few direct as well as indirect tax issues that have become a burden for quite a long time need to be addressed in the budget. There is the contentious retrospective tax, GST and DTC that need to move forward. Here are a few tax issues that need the urgent attention of the government.
Reducing the Income Tax Slabs
Reducing the fiscal deficit poses a serious challenge for the government. Despite this, the government may have to hike the tax slabs as there is so much expectations from the middle class from the new government. It's a relief that is much needed as the tax slab in the Rs 2-5 lakhs has remained stagnant, despite the tax credit of a paltry Rs 2000 announced in the previous budget.
DTC needs to be passed
The Direct Tax Code was created for more efficiency and to replace the existing Income Tax Act, 1961. The bill was introduced in Lok Sabha in 2010 and was referred to Standing Committee on Finance later. The bill is still stuck and the hope that a progressive reform like it, could find the approval of parliament.
Getting CMs on board for GST implementation
As promised during the election, the new government needs to start the indirect tax reform by introducing the Goods and Services Tax. The concerns of all the states regarding GST requires to be addressed as GST will replace all the indirect taxes levied on goods and services by the Central as well as State government. It's believed that the implementation of GST could boost GDP by 2 per cent, due to rationalization of policies.
Reduction in CST
Central Sales Tax is the tax levied on goods sold in inter state trade or commerce. If the new government introduces the GST in the budget due in July this year, then CST has to be abolished or the rates have to be pruned down.
Reduction in excise duty
Excise duty or tax is charged on goods produced within the country. Nowadays excise duty is used as an fiscal instrument to stimulate economic growth. So, a cut in excise duty is needed to encourage domestic production as well as reduce the cost of goods sold in the country as the tax relief is passed on to the customers.
Opposition to Retrospective Tax
Amendments made by the UPA government in 2012 to Income Tax Act with regards to retrospective tax in order to protect revenue was sharply criticized by investors in India and abroad. The tax case of Vodafone became an example of India's aggressive tax regime. The new government needs to bring some modification with regards to the retrospective tax and gain confidence of foreign investors.
