While the Union Budget’s proposal to levy tax deducted at source (TDS) on large cash withdrawals might be the right move, the effectiveness of it needs to be seen, C. Rangarajan, former Chairman of the Prime Minister’s Economic Advisory Council, said during a budget analysis organised by the Southern India Chamber of Commerce & Industry (SICCI).
“It is not a tax on every cash withdrawal, but 2% tax deducted at source on cash withdrawal exceeding ₹1 crore in a year from bank accounts. Clever people can get around this in a number of ways, especially when there are more family members,” he said.
Mr. Rangarajan said that levy of surcharge on income-earners of above ₹2 crore was done in the past. However, this time the increase was steep and might have some effect on investment sentiment. Moreover, he said State governments would be upset with the surcharge, because the revenue would not be shared with them. He also said that he was not in the favour of increase in customs duties as well as increase in excise duty and cess on petrol and diesel.
Fiscal consolidation
“The levy of customs duties will create unnecessary controversies globally. Crude prices are uncertain. Of course, has fallen now. But, it might increase suddenly. When the crude prices increase, will the government have the courage to cut the excise duty? It becomes problematic,” he said. On the positive side, he said the plans to keep the fiscal deficit at 3.3%, showed a commitment to stick to fiscal consolidation.
At the post-budget workshop organised by the Madras Chamber of Commerce and Industry (MCCI), its president Ramkumar Ramamoorthy said, “If I were to recommend one aspect in the Budget that needs to be pulled back, it is the five percent duty on imported books. It’s a tax on knowledge and intellect.” He added, “Given that a significant amount of technological innovation is happening across industries globally taxing access to this knowledge could be counter-productive for the nation.”
M.R. Venkatesh, designated partner, Agastya Legal LLP , said the economic survey laid out a roadmap for an indigenous economic model. “The model is claimed to be investment export driven, mirroring the ones followed by certain Asian countries. The Budget unfortunately doesn’t give a roadmap to link this model as laid out by the economic survey,” he added.
K. Vaitheeswaran, chairman, MCCI Expert Committee on GST and Advocate and Tax Consultant, said, “When automobile sales are witnessing a massive slump, increasing customs duty on many parts and accessories and additional interest deduction on loan for purchase of electric vehicles will have a huge impact on auto industry.”
