Jan 31, 2018

A Stable, Moderate Tax Regime by Dr. Raghupati Singhania

I propose a lower rate corporate tax structure without exemptions

31st January, 2018: The Indian economy is poised for takeoff. There has to be a major thrust from all the sectoral engines for growth. My strategic approach would be the following:

Among the first things that I will do is consolidate and accelerate reforms to ensure that benefits percolate to the common man. For instance, in agriculture, while the focus has been on minimum support prices, I would like to stimulate cold storage infrastructure and proper warehousing to minimise loss of produce to ensure food security, fair remuneration and stable pricing. We have the potential to become one of the largest food suppliers in the world; organic farming and usage of drip irrigation will be encouraged.

While ‘Make in India’ is laudable, the existing manufacturers need a clear direction road map and stable policy regime. To cite an example is the inverse duty structures, which will be corrected wherever required to benefit domestic manufacturers.

Additionally, a stable and moderate tax regime with a clear road map and ease of doing business will be the thrust. Even the US is making efforts by slashing the corporate tax rates. I propose a lower rate tax structure without exemptions. Any ambiguity on minimum alternate taxation regime will be removed.

Real estate will be another focus sector where construction will lead to creation of housing/employment/ and drive demand for cement /steel and housing materials. The thrust on affordable housing will be sustained and widened to one level up.

Manufacturing competitiveness overall and export infrastructure like ports will be given a special thrust. The exports sector as our foreign exchange earnings need to be secured keeping in mind the volatility of oil prices coupled with currency fluctuation have the potential to derail our economy.

Another sector that brings in huge foreign exchange earning and employment potential is tourism. Tourism-related infrastructure /educational institutions and hotel taxation will be adequately focused on, to attract international and domestic tourism.

Equally important are power sector reforms and energy security, which will enable us to achieve the above objectives. We are in the process of shifting to greener fuel and renewable energy, I would ensure that measures are in place to stimulate infrastructure and attract investments.

In a parallel thrust, the small and medium enterprises would need to be facilitated as they can significantly contribute to informal employment thus adding purchasing power at the bottom of the economic pyramid.

After the introduction of GST, indirect tax regime has a clear road map. The focus will now be on direct taxes by widening the tax base, simplifying it, reducing personal taxation.

To be a global leader, we must establish innovation and incubation centres for future technology. Our investments on R&D need to be at par with advanced nations. To encourage and achieve this, I propose that spends on R&D be allowed 200 per cent deduction for another 10 years.

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