Budget 2014 – No Definitive Timelines for GST and DTC
The two most awaited mega tax reforms, the introduction of a comprehensive Goods and Services Tax (GST) in lieu of multiple indirect taxes and the Direct Tax Code (DTC), have been on the anvil for some time. The Interim Budget 2014 has not spelt out any definitive timeline for introduction of GST and DTC but only requested the political parties to resolve to pass the said laws.
For DTC, it is intended to place the DTC for a public discussion without partisanship or acrimony but the effective date of DTC is not spelt out. However, as this would be a far reaching change, it is unlikely to be operative from the financial year 2014-15.
Budget 2014 – Reduction in CAD to moderate inflation
The persistent inflation in the past few years and the high Current Account Deficit (CAD) of about US$ 88 billion in FY 2012-13 was a major concern area and had also led to the depreciation in the rupee by about 21% between May – August 2013. A weaker currency fuels inflation as India has a current account deficit resulting from excess imports bills over its exports. As announced by the FM in his budget speech, the projected reduction in the CAD to US$ 45 billion in FY 2013-14 due to some aggressive measures such as increase of import duty on gold, etc shall assist in moderating inflation and reducing the fiscal deficit.
(Above are the views of Dr. Suresh Surana, Founder, RSM ASTUTE CONSULTING GROUP)