Greyhound Research believes that the Union Budget 2015-16 is a mix bag of hits and misses. The government’s decision to introduce GST by April, 2016 will simplify the indirect tax regime and make it more transparent. However, the decision to review excise duty and service tax separately raises lack of clarity on the execution part of the process and how it will be taken forward.
We believe that the Finance Minister’s proposal to decrease the rate of tax on payments by way of royalty and fees for technical services to non-residents from 25 per cent to 10 per cent is a win-win situation for both MNCs and start-ups in India. This will be a growth driver for start-ups and will help promote entrepreneurship in the country and create more jobs rather than being job seekers.
From the MNCs point of view, this will add more opportunities for them to invest in India and create more demand for their services. We believe that this will also give companies opportunities for expansion in Tier 2 & 3 cities and reap increased profits.
We believe that in this budget the government has not given clarity on developments about initiatives that were proposed in the last budget like E-Kranti, Smart Cities and the 10000 crore fund for SMEs. They have also missed about long pending issues like Cloud Protection laws, Cyber Security and Double Taxation on software.
All in all we believe that this budget is a little flaky in nature as the initiatives announced are in a lot of directions and lacks clarity at the execution level.
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