Union Budget 2019: SME watch

The union budget speech carries some incrementally  helpful tax proposals but roadmap towards a moderate tax regime in the years ahead could have provided predictability. The recognition that foreign capital flows need to be encouraged and simplified  is welcomed, including the attention to address issues of angel taxation. Well balanced budget given the prevailing external environment of global slowdown.

Gokul Chaudhri
Partner, Deloitte India

FM has laid out number of proposals to enhance the sources of capital for infrastructure financing including further deepen corporate bond markets, setting-up of Expert Committee to recommend structure to boost flow of funds, etc. Timely implementation of these measures can provide much needed stimulus to infrastructure development which is key to growth and employment generation.

Hemal Zobalia
Subject Matter Expert, Deloitte India

FM has focused this budget on the future, which is rural India, transformation in education and financial services sector, start-ups, women empowerment, further liberalisation of economy and digitalization. If the measures proposed are implemented in its true spirit, it will help transform the Indian economy.

Jimit Devani
Subject Matter Expert, Deloitte India

Exemption to angel investors from scrutiny of share valuations for investment in start-ups, lowering threshold for providing exemption for capital gains to be invested in start-ups, relaxation of loss carry forward conditions for start-ups will give more momentum to the start-up movement and attract more investment in start-ups. Rationalization of investor regulations such as KYC regime for FPIs, merging of NRI and FPI regime, relaxing FDI route further for regulated sectors etc are in line with the overall objective of increasing investment in India, as indicated by the Economic Survey as well. On the negative side, extending buy-back distribution tax to all companies now (listed and unlisted) will increase the cost of repatriation of funds. Much expected relied on personal income tax slabs is missing and instead, the higher surcharge turns out to be a disappointment for the individual taxpayers.

Shefali Goradia
Partner, Deloitte India

The budget is on the expected lines with the backdrop of the economic survey, to boost savings, investments and capital markets to lead India to #USD5trillion economy.

Bahroze Kamdin
Subject Matter Expert, Deloitte India

From M&A perspective, aligning demerger definition (though applicable from current year) as per the IND AS requirements is a big positive for India, Inc. and will avoid unwarranted litigation on the subject.

The potential raising of public shareholding limit to 35% will impact transactions in the listed company space due to enhanced difficulty in buying out selling promoters as well as delisting possibilities.

Buyback tax on listed companies doing buybacks instead of capital gains taxation will deter MNCs from repatriation due to double impact of taxation also in their home countries – it could have a lesser cash inflow for resident shareholders too.

Amrish Shah
Subject Matter Expert, Deloitte India

The maiden budget by Ms Nirmala Sitharaman was comprehensively presented and thankfully has no surprises or significant additional burdens on the taxpayer except an additional surcharge on personal taxation for individuals with income more than INR 2 Crore. Further, it has some very welcome proposals in relation to easing out litigation through faceless e-assessment, no scrutiny for start-up share premium if requisite declaration submitted and resolving pre-GST pending litigation through a dispute resolution mechanism.

Karishma Phatarphekar
Subject Matter Expert, Deloitte India

From M&A perspective, aligning demerger definition (though applicable from current year) as per the IND AS requirements is a big positive for India, Inc. and will avoid unwarranted litigation on the subject.

The potential raising of public shareholding limit to 35% will impact transactions in the listed company space due to enhanced difficulty in buying out selling promoters as well as delisting possibilities.

Buyback tax on listed companies doing buybacks instead of capital gains taxation will deter MNCs from repatriation due to double impact of taxation also in their home countries – it could have a lesser cash inflow for resident shareholders too.

Karishma Phatarphekar
Subject Matter Expert, Deloitte India