5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

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AnalysisandInsights VishnuSultania VinitBagaria VijayJoshi UnionBudget2017 SpazeTowers RichardRekhy Mortice KPMG HemalMehta

GirishVanvari Deloitte

UnionBudget2017:Morecheersthan
disappointment
FMArunJaitleysbudgetpresentedonFebruary1,2017wascalledgrowthoriented,wellthoughtthroughanda
balancedbudget.HerearesomereactionsoftheCFOsandexpertview.
VartikaRawat | ETCFO | Updated:February02,2017,17:28IST

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UnionBudget2017garneredmixedsentimentsfromthefinanceworld.Some
financeleadersfindthisbudgettobegreatwhereasothersbelievethatthisbudget
missedthebiggerpictureforsmallergains.

Thoughfivepercentreductionincorporatetaxrateisagoodstepforcertain
corporate,butsuchcorporateratecutwasrequiredforallinordertoenablethemto
ploughbackfundsinthebusiness.Thiswouldhavecreatedmoreemploymentand

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5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

Home News Analysis&Insights Opiniontaxesforthegovernment,saysVijay

Policy DigitalCFO Leadership&Management ETCFOTV
Joshi,CFO,RILE&PDomestic
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PetroleumBusiness&CFOIndia,Gas
Solutionsoncorporatetaxreductionfrom
30%to25%.

ButVishnuSultania,GroupCFO,Mortice
believesthattheeffectiverateforthe
smallercompanieswashigherthanthatof
thebigcorporateandsothismovewill
bringthemonthesamelevelmakingthe

SMEsorMSMEsmorecompetitive.(AlsowatchhisanalysisonBudget2o17:
UnionBudget2017:VishnuSultania,GroupCFO,Mortice) MostRead ThisWeek ThisMonth

Financedepartmentsuncertainaboutthe
SupportingthisviewexpertsthinkthatthiswillpushtheMSMEsectorand July1GSTdeadline
encourageinvestments.AccordingtoRichardRekhy,CEO,KPMGinIndia,inthe Lackofenoughtimeto
longrunataxcutfor96percentofMSMEswillincreasecomplianceandhelp testtheGSTNetwork
alleviatethedisruptioninfundflowinthelongrun. andtobringvendorsand
customersonboardgive
financeheadsconcern
Read:ArunJaitleyoffersnobigtaxsoptocorporates aheadoftheGST
OnenationwithonesetofGSTratesonJuly1?
Asthecorporatetaxloweringdidnotcomethroughthewayitwasexpected,India UnderGST,govttostopexemptionsgradually
Incisstillconfident.FinanceMinisterArunJaitleyreducedtheindividualincometax
Thisishowblackmoneyholdersareusingau
rateswhichwilleventuallyhelpboostconsumption.
Institutionalinvestorsattheheartofthegoodc
What'sinforTrade&Industry

InasurveybyETCFO.comtherespondents,financeprofessionalsacrossthe
countryseemtorecovertheirconfidenceintheeconomyafterdemonetization.
Almost65%CFOsfeelthatitwasabalancedbudgetandtheyarenotdisappointed
withit.
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5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

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Thegovernmentseemedtobeinclinedtowardsruralsector,buturbansectoris
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reachingitssaturationandtheruralareaistheemergingmarketsplaceforstartups
orecommercecompaniesaccordingtoSultaniaofMorticeacompanythatmanage
andprovideproject,propertyandfacilitiesmanagementservicesintheIndian
market.Inanycase,governmenthastakenvariousstepstoeasethecorporate
sector:

1:ThecarryforwardperiodofMinimumAlternativeTax(MAT)increasesfrom10
yearsto15years.Thoughtheindustrypushedforabolitionofthisact,the5year
extensionwasmuchappreciated.MurthyofNTTDataServicesays,Nosignificant
impactonITservicesexceptthecarryforwardofMAT

2:Legislativechangesandnewlawtoconfiscateassetsoffinancialoffendersor
defaulterswhofleethecountry.

3:Addressingtheissueofcompliancecostinsmallbusinesses,theBudgethas
increasedthethresholdlimitunderwhichdomestictransferpricingprovisionswillbe
triggered.Thethresholdlimitfordomestictransactionhasbeenuppedto20crore
from5crorenow.AsPareshGupta,CFOofaContractResearchOrganization
GVKBIOfeelspositiveaboutthismove,"removingdomestictransferpricingisa
steptowardsavoidinglitigationsandharassment."

Expertssay...

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5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

Home News Analysis&Insights Opinion4:Finallyafter9GSTcouncilmeetsthe

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governmenthasfinalsedrecommendation
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onalmostallissuesbasedonthe
consensus.InfacttheITsystemison
scheduleandthegovernmentwillreach
outIndiancompaniesforGSTawareness
fromApril1,2017.Therewasnotmuch
onindirecttaxwhichisagoodsignalfor
GSTimplementation.

5:ThosewhoacquiredsharesinunlistedcompaniesafterOctober1,2004,willhave
topay10%longtermcapitalgainstaxiftheyhadn'tpaidsecuritiestransactiontax
(STT)atthetimeofpurchase.ExemptionprovidedunderSection10(38)isbeing
misusedbycertainpersonsfordeclaringtheirunaccountedincomeasexemptlong
termcapitalgainsbyenteringintoshamtransactions.Withaviewtopreventthis
abuse,itisproposedtoamendSection10(38).

6:TheGovernmentwilllaunchtwonewschemestopromotetheusageofBHIM
theseare,ReferralBonusSchemeforindividualsandaCashbackSchemefor
merchants.AadharPay,amerchantversionofAadharEnabledPaymentSystem,
willbelaunchedshortly

Financialsectorsreforms

ThoughJaitleysbudgetseemmoreinclinedtosocioeconomicsectorbuthe
consideredthefactthatIndiancompanieshadbeenstressedwithlowprofitability
andinvestmentandinlieuofthis,hemadethefollowingmajorannouncementinthis
budget:

AbolitionofForeignInvestmentPromotionBoard(FIPB)in201718.Thisisanother
positivesteptoliberalizeFDIpolicyframeworkandeaseregulatoryhurdlesin
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5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

attractingforeigninvestment
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Read:FIPBabolishedbutreformtocontinue

ComputerEmergencyResponseTeamforFinancialSector(CERTFin)willbe
establishedtostrengthensecurityofthefinancialsectoramidincreasingincidentsof
cyberfrauds.In2016publicandprivatebankssawthebiggestcyberfraudwhen32
lakhdebitcardswerecompromised,Jaitleyinhisbudgetpointsoutthatthisteam
willworkinclosecoordinationwithallfinancialsectorregulatorsandother
stakeholders.

ListingofidentifiedCPSEsonstockexchanges.ThesharesofRailwayPSEslike
IRCTC,IRFCandIRCONwillbelistedinstockexchanges.Thiswillincreases
transparencyingovernmentcompaniesandunlockitswealth,saysGaneshMurthy
|SeniorVicePresident&CFO,NTTData.Thisisagreatsteptowardsbringing
efficiencyandaccountabilityandalsogeneratingadditionalresourcesforboth
governmentaswellasrailwayswhichiscurrentlystarvedoffundsneededfor
improvingitsinfrastructureandservices,feelsCFOofGVKBIO.

MEASURESFORSTIMULATINGGROWTH

Concessionalwithholdingrateof5%chargedoninterestearnedbyforeignentitiesin
externalcommercialborrowingsorinbondsandGovernmentsecuritiesisextendedto
30.6.2020.ThisbenefitisalsoextendedtoRupeeDenominated(Masala)Bonds

Forthepurposeofcarryforwardoflossesinrespectofstartups,theconditionof
continuousholdingof51%ofvotingrightshasbeenrelaxedsubjecttotheconditionthat
theholdingoftheoriginalpromoter/promoterscontinues.Alsotheprofit(linked
deduction)exemptionavailabletothestartupsfor3yearsoutof5yearsischangedto3
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5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

yearsoutof7years13
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AllowableprovisionforNonPerformingAssetofBanksincreasedfrom7.5%to8.5%.
InteresttaxableonactualreceiptinsteadofaccrualbasisinrespectofNPAaccountsof
allnonscheduledcooperativebanksalsotobetreatedatparwithscheduledbanks

BasiccustomsdutyonLNGreducedfrom5%to2.5%
Source:http://indiabudget.nic.in/

Infrastructure&RealEstate

Nodoubtthisbudgetisconsideredproagriculture,proruralsectorbutfocushas
beengiventoinfrastructureaswell.The79%increaseinallocationforinfrastructure
saysitallandthisisawelcomemovebythefinancecommunity.

Accordingtoexpertsitishearteningtoseeasignificantsafetyfundinrailwaysand
goodallocationofcapexforroads,railwaysandotherinfrastructure,including
irrigation(includingwaterefficientmicroirrigation).

Onemovethateveryonecheeredisthetaxincentivesgiventoaffordablehousing
andrationalizingcapitalgains.Nowdeveloperscanaccessforeignfundsata
cheapercostbywayofdebtandwillbeaprioritylendingforbanksaswell.

Affordablehousingisapriorityforthisgovernmentanditwasexpectedtogetan
Infrastatus.Thisshouldresultintoaprogressinthesaidsector,saysHemalMehta,
PartnerDeloitteHaskins&SellsLLP.

OntheotherhandVinitBagaria,CFOofamanufacturing,financeandtrading
companySpazeTowersshareshisexperience:thefactremainsthatindustrystatus

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5/28/2017 UnionBudget2017:Morecheersthandisappointment,CFONews,ETCFO

hasnotbeengrantedtotherealestateindustryatlarge.Duetothisnobankeris
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willingtolendmoneyforlandacquisitionwhichconstitutesmorethan3540%oftotal
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costinurbanhousing.

Onsimilarlinesthelongtermcapitalgainstax(LTCG)onequityinvestmentdidnot
changebutinsteadtheholdingperiodforLTCGforimmovablepropertyhasbeen
reducedtotwoyears.

Read:LTCGtweakedforrealestate,remainssameforequity:Here'showitworks

TheTradeInfrastructureExportSchemewhichisallocatedRs3.96lakhcrore,will
helptheIndianexporterstobecomegloballycompetitive.Thisleadstohigh
borrowingsfromNBFCleavingonewithhighinterestandsoconcessionsshould
havebeengiventoboostrealestatesector,Bagariaadds.

WayForward

Budget2017aimstoenhancethetaxbaseandmovetowardsdigitization.Non
applicabilityofindirecttransferrulestoFPIsandAIFswillbeabigrelieftothe
investorsandcouldtriggeranimmediaterallyonthestockmarkets,saysGirish
Vanvari,HeadofTax,KPMGinIndia.Budget2017isstablefinebalancingact,with
fiscalprudence,directionalspendingandnosurprisesonthetaxationfrontwhich
shouldleadthecountrytoasustainablegrowthpath.Governmentsreformsinthe
recentmonthsbeitremonetisationorimplementationofGST,itwillhaveapositive
impactontheprivatesectorinvestment.

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PTI | May27,2017,10:40IST

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GovernmenttoallayIndiaInc'sGSTfearsvia
interactivesessions
Thiscomesafterseveralcompaniescomplainedaboutanincreaseintaxationandaconsequentriseinpriceswhen
GSTisrolledoutasexpectedonJuly1.
DeepshikhaSikarwar | ETBureau | May27,2017,10:32IST

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Infosys,HDFC,Big4inqueuewithstartupsfor
GSTSuvidhaProviderslicence
Flipkart,too,hasappliedtobeaGSPinwhatindustryexpertssaidcouldbeastrategicmovetogetmoresellerson
boardbyofferingtaxsolutions
ETBureau | May27,2017,10:29IST

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