The Council of EU Chambers of Commerce in India (EU Chambers) had organized a Presentation and Panel discussion on Implications of Union Budget FY 2019-20 on 8th July 2019 at the SKF office Pune. The event was supported by SKF Ltd.


Excerpts from the speech of Mr. Ashok Barat, Vice-President, The Council of EU Chambers of Commerce in India: 

Ladies and gentlemen, it’s a rainy evening and that makes your presence so much special to us because you braved the weather and all the traffic that is associated with it to come all this way and join us for this evening. So very warm welcome on behalf of the Council of EU Chambers of Commerce in India. We are honoured and delighted to host this event in the city of Pune which though unfairly at times overshadowed by the city of Mumbai symbolises no less the spirit of entrepreneurialism, industriousness and commercial success as any other. It is a privilege to host this event as a tribute to the enormous success of industries and businesses of Pune.


Pune has always been a very important part of the EU Chambers agenda. I can assure you that this will not change in fact only grow. It’ll not be my case to introduce the budget or to debate its various nuances. We have eminent speakers and panel members to do that but I would just like to share some thoughts, these are my personal thoughts and some of them may also resonate yours as well. Firstly, the NDA regime has marked with numerous departures from traditions which many of my generation have been used to in the past. These deviations are not accidental on the contrary send a clear message that nothing can be taken for granted anymore because it is the way it was. Disruptions in technology will be accompanied by unpredictable changes in laws, policies, administrative behaviour and at times political narrative as well. As businesses we have to start preparing ourselves better for handling developments that are clearly outliers to our standard and normal assumptions.


Secondly, we have to learn to deal with not just the letter of the law but the spirit and sometimes nuance spirit that might lie behind it. This will mark a rapid and remarkable shift in the way we give and receive professional opinion and advice and thereafter plan our actions and reactions. Thirdly, there will be distinct bias towards equity driving policies and actions, socialism may just be a name for it but certainly animal spirits while not leashed will have to be demonstrated and delivered in a more human and unpretentious way. Lastly, above solvency justice will be as important as dispensation of justice with the principles of jurisdiction. All these will require a very modified and calibrated action from business community. We will remain under the spotlight under close scrutiny for times to come. This is the new paradigm for which we all have to be prepared for. Thank you once again for being with us despite the waves. I must say a very special thanks to Chandramowli my distinguished past president for being the generous host which he has always been. He has been not just a patron of EU Chamber but someone who has been a source of inspiration for the things that we have done over the years so thank you Chandramowli and now let’s invite.



Excerpts from the speech of Dr. Renu Shome, Director, The Council of EU Chambers of Commerce in India:


Good evening ladies and gentlemen, before we start the presentation let me take an opportunity to briefly tell you all about EU Chambers of Commerce, most of you must be knowing about the organization but just for the benefit of everyone I will quickly run through what is EU Chambers and our activities. As you know Council of EU Chambers is placed in Mumbai and it’s one of the apex Chamber of bi national chambers as well as bi-national committees. We represent many bi-lateral chambers and we have 10 bi-national committees and the objective of Chamber is basically to link business and trade between the EU and India. The objective is to promote the business between India and Europe. The vision of the organization is to provide a quality service to our members and society at large. We would like our members to grow quantitatively and qualitatively. Our mission is to be India’s key business forum for information between European Union and India and we also create a lot of business opportunities, network opportunities for the people and we also work as a facilitator to strengthen the business between EU and India. We also work as an advisor with the help of our expert committees.


The chief patron of our organization is EU ambassador apart from this there are three main stakeholders, we have EU companies associated with us as well as the Indian companies. We have divided our services in three parts, one is the activities which we have been doing over a period of time. One of our flagship events is ‘Europe Day’ which I’m sure you all must be aware that European Union was formed on 9th of May so we celebrate it as one of our networking events. We also organize many panel discussions and our annual general meeting. We also host various conferences, workshops, business delegations from various parts of Europe. We take business delegations to various EU countries with the objective to explore business opportunities for our members in various countries. We have a business support system where we receive economic and monthly reports from various Indian embassies which have trade inquiries and business leads which are disseminated to our members. We also help in the market entry support with the help of expert members, visa recommendation. We have plug and work kind of facility for companies who want temporary arrangements. We also have various marketing options for companies where they can promote their product and services through our discounted offers such as advertisement in in-house newsletter, directory, website and sponsorship at various events.


Our membership has various categories SME, large and lifetime memberships. We have analysed our membership state wise, sector wise and category wise. Chamber is heterogeneously represents all sectors.


As an EU Chamber we majorly focus on Central and Eastern European Countries as we believe there are enormous opportunities and our members should be exposed to them.


We have mount business delegation to various European Countries every year. We would be happy to provide our services to grow your business in various European Countries.

Thank you very much.



Excerpts from the speech of Mr. Pramod Achuthan, Tax Partner, EY India:


Good evening everybody, respected Mr Barat, Dr. Shome other dignitaries of the dais. I would first like to start by thanking the EU Chamber for hosting us as a knowledge partner, it’s our privilege. This budget has been an interesting one and like Mr. Barat said as he started by saying 3 to 4 key features and deviation is one thing, expectation and right from where he started if you look at the way we have our first full time lady finance minister so Nirmala Sitharaman did a great job by presenting the budget, she didn’t even drink a single glass of water in her 2 hour 15 minutes speech and she went into this speech without carrying a briefcase that has been from our first FM after independence, everybody carried a briefcase but she didn’t carry a briefcase she carried it like a big katha and she said I want to promote make in India, promote indianisation. We want to do away with deviation so deviation is the theme.


This NDA government even the earlier one with Vajpayee government the first time when they presented the budget the 5.00 pm time they put into 11;00am ,the 5;00pm took with London stock exchange time that time so NDA government is used to do a lot of different things and you know what I try to do is I tend to look at the headlines of the newspapers next day to understand the headlines given to get a sense of how the world is looking at this budget and Economic times said budget takes economy to semi-finals. ET headings said FM stumps rich bats investment so cricket is of course a theme with the world cup going on so how we not have cricket so newspapers played along that. We will go through other things that are there but you know one key thing which is coming out is with this whole economy $ 5 trillion GDP goal which the FM has set out and it is there in the economic survey also that by 2025 we are at $ 2.7 trillion today by the end of the year we will be at $3 trillion and $5 trillion is the goal in the coming 5-6 years from now which is fantastic and you know and needs 8% growth and animal spirit to kick in to get there but let’s see the announcements, the way I will be covering the budget backdrop and direct tax proposals and then my colleague Sagar will cover the indirect tax proposals. Directly jumping to the budget backdrop, I think the first key announcement which was not a part of the speech interestingly speech got over and she suddenly remembered she never spoke about fiscal deficit.


This again a speech which was missing about allocations if you look at normally budget speeches they normally start off by saying that we are allocating so much to defence and allocating so much to so many schemes all of that  missing, even fiscal deficit not all mentioned in the speech later on after the speech got over she said this is our fiscal deficit number which is 3.3% superb it was 3.4%,3.3% is a great achievement and some economists are questioning this 3.3% , they are saying some food corporation of India has done a lot of borrowing so is this 3.3 correct should it be 4 so we try to bring those off balance sheet borrowings also into our fiscal deficit calculation but overall FM mentioned that we are on a glide path, the FRBM said we should get at 3% fiscal deficit target and it seems we are going there.


Again GDP growth projected at 7 % it is up from 6.8% which is good, we need 8% to get to $5 trillion. So there is a lot more that needs to be done. 7% is again a good growth rate to be projected. Again from an overall outlook the expression the oil prices will either remain stable or go down. All our calculations are based on oil prices going down and our petrol prices are going down on the other hand so our taxes are there to ensure that they remain stable but at least the global oil prices are going down is at least one of the assumptions. There are some downside risks that remain whether it be consumption or rural sector where we are seeing consumption going down, rural sector is in a bit distress so there needs to be something better done there. The economic survey said the exports, there needs to be a lot more policies on exports which needs to be there. The budget actually misses out on exports sector. No initiatives really targeting exports and pick up on exports side. Coming to tax revenue as a percentage of GDP, interesting statistics here if you see financial year 18-19, which was last year, direct tax was 6.4%  of the total GDP and indirect tax was 5.6% and aggregate was 11.9 %. The budget estimates for next year are actually predicting that as a percentage of GDP the taxes are going to go down going down to 11.7% and indirect tax is going down to 5.3% so this is the change from the interim budget, interim budget which Mr. Piyush Goyal presented there the percentages were on the higher side but they have seen what has happened in the last 4 months and somewhere said our expectations need to be different and tax to GDP ratio is therefore expected to fall down. Even the tax buoyancy which is being factored while arriving at these calculations significantly lower compared to the last many years. When the GDP is expected to grow, 7% GDP growth rate, inflation in the range of 3%-5% giving a nominal GDP growth rate of about 12% and that 12%, if GDP is growing by 12% then by how much should taxes grow by, that is tax buoyancy. Estimates are very conservative you know in that sense it is not that there is a lot of tax collection or expected to go up. If you look at tax numbers, the super-rich tax that is expected to give Rs 12000 crores.


The customs and excise increases are expected to give about Rs 25000 crores and the corporate tax 25% rate for less than Rs 400 crores is expected to give away Rs 4000 crores so overall it’s Rs 33,000 crores increase not a big increase but that’s the increase budget proposes. The right side graph shows India’s ratio and this is both central level and state level taxes put together and that’s why it’s 17.1%, we are still not that heavily taxed if you look at our GDP. GDP is probably quite huge. Sectors like agriculture which are out of this tax net and that too is one of the reasons why we are low on tax to GDP ratio.

Again borrowing for the first time, we spoke about deviation in the start, this is another deviation for the first time the government has said we will go out and sovereign bonds will be issued in the overseas market and we will borrow foreign currency so it is a new initiative. Borrowing rates are at all-time low so it’s a great initiative. I think the third one over here which is this 25 in this listed companies, minimum public shareholding is 25%. FM said we will recommend SEBI to bring minimum public share holding to 35% and proudly market says that due to this single measure there are around 1400 listed companies which need to be delisted, the kind of promoters who will need to reduce their number of shares over here and about 4 lakh shares are going to flood the market and that is one of the reasons why share market both today and on Friday timed another 800 points so it is this proposal and the proposal on super rich tax which I will talk about later on. Labour law reforms, kind of condensing our multiple laws into 4 labour laws code. Labour law code is again one of the statements that is a great initiative, economic survey talks about this already being done at Rajasthan and having being successfully implemented there while state government didn’t come back to power over there at least NDA government is looking at this to be done over here. Again new national education policy brilliant initiative, we need to see what shape and form it takes.


Again opening up FDI so again money which needs to come from outside so investment is a big thing. It has to be locally as well, people need to pump in more savings and similarly FDI needs to come in. Similarly other sectors like civil, aviation, insurance and FDI in single brand retail are some of the local sourcing norms whether it be Apple and all those companies had some problems in the current regulation has said 30% local sourcing so all of that can be reached which is again good and similarly some of the FPI, NRI investment norms again some liberalization over there which is positive, so these were some of the non-tax proposals some of the major ones. Coming to the key direct tax proposals, first talking of where it hits our own pockets the basic tax rate slabs have not changed but the surcharges have increased significantly from 15% to 25% for income exceeding Rs 2 crores up to Rs 5 crores and above Rs 5 crores it goes to 37% so this means that the maximum marginal rate per person who is in the above Rs 5 crores category that goes to 42.7% which is quite a big a 7% increase for that particular category. Solomon justice is the word used and in some paper it is talked about as Robin Hood tax or soaking the rich which are just different terminologies used. This another measure which has affected stock market as lot of FPIs which are invested they are either structured at AOP or trust and they are also hit by this additional surcharge so that’s one of the impact over there. I think on the TDS side changes are that the new TDS is of 5% if more than Rs 50 lakhs payment is made either for professional fee payment or contractor payment by individuals. Individuals if they are in business tax audit is applicable to them then you should do TDS but now there is additional TDS if you are making such a huge payment, they want to capture this in tax net. Insurance payments, insurance companies relate to what India is today, if it is a taxable pay-out which they are doing then they need to do 1% tax TDS on gross amount now they need to do 5% on the net so it is a good measure for the recipients and last one is again immovable property TDS that happens today so they have clarified so when you make the payment for pay-outs like clubbed membership, maintenance should be covered all of that should also be covered when the TDS is being done.


Affordable housing this was a closure which was there for a limited period so that window again is reintroduced. Additional deduction of Rs 1, 50,000 but they have defined some terminology what is affordable housing? House value should not exceed Rs 45, 00,000, stamp duty should not exceed Rs 4, 50,000 and loan should be sanctioned in the year 19-20 if these conditions are satisfied then additional deduction over and above Rs 2,000 otherwise available is additionally available. Again electric vehicles is a big push which this government has given. The economic survey said for electric vehicles charging infrastructure should be there and more than tax incentives you need to have charging infrastructure.


This particular provision is talking about tax incentive of Rs 1, 50,000 for loans sanctioned during 1st April 19 to 23rd March. The memorandum says that it is also for the first car only that it’ll be available, first electric car but the finance bill it does not have that condition that for the second electric vehicle if you buy more electric vehicles then the additional reduction could be available is the way the finance bill rates right now. It’s very good provision, you need to have charging infrastructure in place for this to work. In NPS, the way NPS works is 40% of the final receipt, when the maturity is reached after the age of 60,whatever is withdrawn up to 40% compulsorily has to be annualized the balance 60% can be taken in cash, out of balance 60% , 40% was non-taxable 20% was taxable now they have said entire 60% is non-taxable. So virtually NPS receipts will be tax free.


But what happens is 40% has to be compulsorily converted into annuity and the balance 60% is what you get in cash that balance 60% now confirmed and non-taxable and 40% will be tax cum receipt of annuity so when the conversion to annuity happens there will be no tax from a corporate perspective one of the measures was from this tax rate of 25% which was available to companies with turnover of up to Rs 250 crores. The Rs 250 crores has now been made to Rs 400 crores so again a very good measure. With this change 99.3% companies in India get covered so it is only 0.7% of the companies which are left out but those companies contribute lion share of taxes that are getting collected.


Hopefully we will have like this 25% to be applicable for all companies and hopefully it will happen over the next year or so. I think interest on rupee denominated bonds there was a 17sector point notification which says interest will be exempted so now that has come to into law. So it is applicable for bonds which are issued up to 31st March 2019.There are variety of incentives for start-ups one of it is carried forward on losses, section 79 of the income tax act whereby there are 2 conditions that is 51% of the voting power which is sealed what is applicable for all companies second condition remains that all shareholders remain same and for a period of 7 years and continue to hold shares that was a second provision applicable to start-ups as a beneficial provision. Now we are seeing change in the shareholding of start-ups also. And therefore the government said start-ups can satisfy either of the conditions.


Earlier start-ups had benefit of only second condition now they can take benefit of first condition as well. Similarly there is investment, the capital gains expenditure that you get if from similar property gains are invested in a start-up so the benefit that is available. Some changes in that ownership can be up to 25% instead of 51%, the start-up has to utilize it in a 1 year. The exemption is now available till 2021 and software or the assets which are purchased that can be adjusted within 3 years instead of 5 years which is reduced to 3 years. Some interesting benefits for start-up there is one more on which I will come to later on. Other one which is a very good proposal is, the FM mentioned this as benefits for sunrise in advanced sector , we are going to introduce a scheme for mega manufacturing clients for sunrise in advanced sector and she listed some 4-5 different companies semi-conductor of fabrications, Solar photo voltaic cells, lithium storage batteries, electric charging infrastructure, computer servers, laptops. These will be competitive bills processed and will be allowed to set up plants with a lot of tax incentives and what was mentioned in the speech was 35 AD in the finance bill, it is not finding any place in the finance bill and what kind of benefits how it will work we wait to see but again it is related to charging infrastructure for electric vehicles. Some of the benefits that lithium storage batteries, the solar charging infrastructure it is really creating the infrastructure for electric vehicles. Some other benefits are to encourage companies like Apple to set up shop over here so we need to see how this goes but this a good and interesting provision we need to see details of it. Angel tax, start-ups have this problem that when they receive cash, the amount that can be received in cash excess of face value that was being taxed.


There was a provision called angel tax and that was to tax companies that it was not for start-ups for companies which were reducing provisions and convert black money to white by getting into wrong means but as start-ups were concerned government had given some liberalization saying if category1 AIFs have to invest in start-ups angel tax was not applied to them now they have extended it to category 2 AIFs also it is again positive for start-ups. They have said that if there are certain conditions certain notifications for start-ups eligible and provisions are mentioned down there and they say whenever the condition gets violated the premium which was not taxed in the first year will end up getting taxed subsequently that is the other change which has come solid. I think other changes which are there are on the reporting side that is payments to non-residents, there is a provision which says that residents even if you don’t do defaulting you are in default but if the other party does the default so it’s again penalty for under reporting, I’ll say income reported to 140a notice also then you will be subjected to penalty. And this is majorly error in the drafting provision that’s why it is a retrospective change so nothing to worry over there.


Again non filing of returns by individuals clarified something and have said some taxes will also be considered while calculating what is the net tax payable. If it was above Rs 3000 crores prosecution could be done now it has moved to be above Rs.10, 000 crores but net tax payable is after deducting everything that has been deposited. I think it is a minor change, demerger is a complied complete interesting change when you do demerger another condition for tax is that the values should not change company that is the divesting, values should be same as it was in demerged company but for Indians that was not possible as Indians require records of values at definite prices therefore now they have said if you get a different price on provision that is it is eligible for tax audit. It is a clarificatory amendment. It is a curative amendment and therefore one can technically apply for the past. I think there is some other rationalization measures on gift tax provision 56, CA power to themselves to say some situations where this will apply. For example if SEBI takes over for under guide there is some price which gets applicable? If 56 to 10 is not applicable they may ask to notify situation by say 56 to 10 be not triggered. Again the next carry forward of losses and mat, IPC companies have some of the benefits today but if government takes control of a particular company, benefits will not be applicable they are now extended, when government takes control of the board, these benefits will apply to those set of companies.


The newspaper report suggests that IL&FS has done this and similar other cases which will come up in future. I think digital is the way of future, so a lot of provisions for digital. They have said TDS of cash withdrawals, any cash withdrawals in excess of Rs 1 crores in the aggregate will attract a 2% TDS so banks will now start to deal with TDS. Whenever threshold is reached, they have noted it was somewhere around Rs 11 lakh crores cash withdrawal last year that is in the last financial year 17- 18. 1, 75, 000 companies or SSEs withdrew currency up to aggregating to Rs 11 lakh crores. Again different electronic payment talk about only certain modes now lot more modes now being allowed that again is a good provision. And again requiring that some businesses crossing a particular threshold, mandatorily need to offer electronic mode of payment to their suppliers. So all positive changes promoting digital economy. Anti-abuse there is again a gift tax provision which says if money is received by non-resident from a resident as a gift then that will be deemed as arising in India. Sometimes non-residents may think of it as not arising in India therefore not taxable so that is no longer possible. By that tax coming to a minimum change which again is a thing that has impacted the stock market. Where they have said tax will be applicable to listed companies earlier it was only for unlisted companies but now that has been applicable to listed companies also. Transfer pricing, some of these changes are I will say, instead of the secondary adjustment in transfer pricing there is now an option of you can give a onetime payment of tax at the rate of 18% along the surcharge of 12% aggregates to nearby 21%, you pay that and transfer pricing adjustment stops instead of getting it added year on year. The good option that is there, instead of secondary adjustment one should look at this option.


Again FPS they have said that you can get money from any, it has to be from the same transaction that has been amended. I think once CBCI and master file which is what the position was always if alternate reporting entity if it is an Indian company can follow the financial year of the parent entity if not the Indian financial year and master file even if no international transaction so some of these amendments are more clarificatory in nature. The last slide on direct tax, a lot of changes have been introduced seeing the ease of living, one is that of Aadhar, Aadhar and PAN can be interchanging to use. Prefilled income tax returns, a lot of salary income, interest income, capital gains all of these will come pre filled, some of these will be pre filled. They have put a lot of measures to collect data also and to ensure all of this will come in returns, it’s a welcomed positive change. I think phase less assessment is a great change already you have key assessments we have electronic challenges but if key assessment is done by a normal assessing officer now you will say you don’t know who is assessing officer, there are cells which will randomly allocate and you will not know with which assessing officer, so it is a great initiative if you see to who all it is extended and again the lower TDS application, it is mandatory to be done by electronic mode of payment, these are the changes from the direct tax side.



Excerpts from the speech of Mr. Sagar Shah, Tax Partner, EY India:


Good evening everyone, so after years of tax proposals coming as indirect tax before GST with several pages and several clauses, so we would dig down to understand what are the changes in VAT, customs, excise and more or less now it is talking about customs and older issues like profiteering . I have divided the presentation into parts with regards to GST, what all changes are there, changes that are required under the law from that perspective. We look at some of these and secondly new scheme on litigations disputes that we see and thirdly we will see customs. So looking at the first thing anti-profiteering and this was dealt with for years together while very often we hear about what is it, how is it happening how the authority is dealing with this cases and now you have cases which are dealt with NAA and some of it also before the high court to say whether it is right or wrong and dealing with these cases. Let me tell you at this point in time, the government got the right to extend the duration for NAA by 2 years. It also means that the government is now looking at anti- profiteering still as something in the hands of government where as those benefits that a company is still getting. If you see at this point in time industry wise it is FMCG, it is all industries which are manufacturing MRRVS products and real estate and various sectors which have got the brunt of anti-profiteering. At this point in time it is probably more because of some complaints made by customers or from government if there are some issues that is if the sector has. Recently under GST, still we have not seen anything under GST or asking question with GST audit and very recently in the last 15 days, the government now has GST audit team which has been appointed across entire country which means that they are now going to start the GST audit.


Once we start having the GST audit, the question can still come up because this is something where commissioner can soon move into enquire into de-profiteering. This one thing where government is speaking when the audit starts, but it has still not happened in the last 2 years now and this is where it will kick-start now in December, and this one thing about which we need to be careful about, not to say 17-18 is gone and whatever has happened has happened. It is something critical into which we need to look into. They have not only extended time frame for again more by 2 years but also introduced penalty inclusion saying that if there is a demand if there is additional amount of anti-benefit, it will be 10% above the profiteering so this is something about which it will be very critical and we will have to see how it happens. Another point is on advance and if we see by now on various cases, if every city has authority rather than wait for audit or assessment to happen then let’s try to create a taxability issue, trade issue let me go to the assessment authority, let me try to sort it out. What happened basically was a very different experience, you had the same matter and the order came out different from Maharashtra authority, different from Rajasthan, different from West Bengal in terms of spirit in terms of what came out was a similar issue which actually started by saying is it working or you should have one national anti-profiteering authority which will give court to say for more better, considerate judgement while the order is coming out. This is a good move rather than every state having an authority, authorities currently if you see the person who is joint commissioner level, state level or national level which means that it was the same approach to look at it not from a judicial mind to an extent but to say that to look at the taxability 99% advanced rulings which happened against the tax payers which confirmed the position or said that we may not be able to give you the order because it does not form the part of advance ruling, I think this is a good thing and probably we are also looking at this authority not being checked and it is also why a department level you may have someone like a department level  technical member who may come up and look at this entire thing very positively and this is one good thing I’ll say that has happened and it helped the industry in upgrading.


Now we will move to important point, which has come as a big saviour to the industry that is interest on delayed payment. Now let me tell you what the issue is all about. If as a company you have doubt in credit, input tax credit and it is carried forward for tax liability for an earlier period, one of the ground that we would have taken is to say that, I have a tax liability today for an earlier period but I always felt balance line in my input tax credit which means I’m carrying forwarding the entire credit and at that point in time for the month I had the tax liability, I should not have any interest liability but unfortunately because of high court ruling and a circular which came out and reading of the provision says that if you have input tax credit and implies to the verdict which is there to say you have taken credit or utilized credit and it doesn’t say and one if there’s probably interest liability there so even if you have a credit balance but if you have a tax liability today you would have ended up paying interest. This is what this amendment is trying to say in the proposal. If you have credit balance, if you have already paid the tax even if there is liability later on that should not attract interest, this is a good proposal.


Another provision that is a lot of exporters face is that issue to say that typically you go to a central authority to pay my export refund, the order is passed, refunds will be granted or it’s part and then if you ask state government to release the part of fund which again was a time consuming process there to exercise in terms of what was happening, state officers asking the same question, they have done away with that, now if there is a refund for exports, and if there is central government then entire refund will be passed by that authority you need not go the state government, I think that’s a good proposal. Lastly there is stiff you see the focus they started by talking of electric vehicles and if this it then recommendation goes to the GST council, to the committee to reduce the rate from 12% to 5% and now we wait to see how it unfolds and as we talk of the focus on EVs and 2025 has been  set as a benchmark target to say that we want industry to come out with electric vehicles and it is not easy, there are challenges, various technologies to look at what happens to that but then whatever is the benefits currently are being proposed most of them I would say whitewashed to say that benefit of Rs 1,50,000 interest for a car or two wheeler which means that you need to buy a car that is at least more than 15 lakhs if I take 10% interest rate.


The intent is very clear so this is how you need to do, how it is implemented, each of the provision included it is really used in the right perspective, to follow the right perspective. The second part is the most interesting thing we have as a budget, ’sabka vishwas’ very interesting with regards to all the legal disputes we are talking about and service tax. It is like one time opportunity for all of us to get rid of all those liabilities of financial statements. Let’s divide the matter into 2 parts, one is that you have whole pending litigation prior to 30th of June and what do we mean by pending litigation and what is the eligible criteria for it, which cases you have pending will be eligible for this particular scheme. What is the amount that is eligible and to what extent the benefit that is there on the tax as an interest penalty is the second part we will talk about and third is procedures. So let’s look at the first part, which we are talking about that to whom this particular provision is applicable. So it is generally to say that, it is more of who will not be allowed to take benefits generally.


Let’s look at some of the cases and look at the amount. So one look at the case where show cause notice has been issued and hearing had not happened. And in that there are pending dues which are there or there is an appeal which is there or if there’s any appeal which is pending at any of the levels as of 30th June and if the amount is less than Rs 50 lakhs then it is 70% of the tax due and if it is then it is 50% of the tax due and for the balance you get a waiver usually question arises is what happens to interest and penalty ,so honestly it’s an open issue at this point in time while the intention clearly seems if you have paid the tax at 50% or 70% then the entire interest and penalty should be waived. This is coming from the rating which says that second point that there are no tax dues which is the loophole of it, and there is no show cause for tax but only for penalty. So the very reason to say is that if you have paid tax there should not be any penalty.


I think the same intention carries forward to generally say that if you pay the tax 70% because your corpus has Rs 50 lakhs, of the value and you pay the tax then there should be no penalty. The general good way to look at the scheme because I think if that happens then I think it is a for all of us to rush and if it doesn’t which means to look at it that 70% would be probably for tax, interest rate and penalty I would hope for the cases where it will be worth to get into such system. What is important here to say is that you have one group of notice and there are 3 issues that are there, 1st is that you have excellent case and there is no way you want to go into it and the second one is that you don’t have a very good case because of the first you’d fight and the third is a grey one that is 50-50% case. Now do you have a choice so at this point in time but in terms of real business there is something which we can come back, I really think there is a fair chance to say that this benefit can be agreed, this is something which we need to wait and see as a scheme just comes out and you can go back to government to CBI for the clarification but there is one more thing important to say that you need to be selectively allowed to go under the scheme.


So a parallel example, recently there’s Maharashtra scheme and typically issues where under CST because of CST, kind of reforms that are there has what is there under C forms and M forms and every alternate company has done it we are not able to get C forms and M forms go back to that same amount but when it, I deserve and can get back refunds. So now for the same year so for CST I’ll go by NEFT. So basically what has happened is if there is a good place I can resolve what I want to. Another thing which we need to look into, you have filed an appeal before the court and the appeal is pending and hearing is done, normally what happens is that bench will say order is pending and you will go back and they will revoke the order to. Unfortunately when the final hearing is done you will not be able to get final of it. SSSSIt means that in the first hearing or middle you will have benefit but final hearing you are out of the scheme and with this I’ll like to conclude my speech thank you so much.



Panel Discussion


Mr. Chandramowli Srinivasan, Former Finance Director, SKF India Ltd.:


Good evening ladies and gentlemen, a lot of hype was created around this budget. The television screens were screaming at us   ‘decisive mandate, decisive budget’ it was the slogan. Very quickly before I get into detailed questions in the backdrop of slowing world economy, trade wars, increased protectionism, a mass slump in our own growth rate in India and lots of hopes being pinned on this budget. A quick question to all of you on a scale of 1 to 10 how much would you rate this budget.


Mr. Rahul Oza, Partner & Head (Pune and Mumbai), Roedl & Partner Consulting Pvt. Ltd. said I would like to rate 8. Dr. Thakur, Deputy Director, Symbiosis School of Economics said he would rate it as 5. Mr. Kulkarni, Former Plant Head (Pune & Ahmedabad), Tata Motors Ltd. said I would like to rate it as 7 to 8.


Mr. Chandramowli Srinivasan – Okay that was a quick feedback. I’m bit surprised that an economist has given 5. Finance minister almost forgot to talk about the fiscal deficit, in fact as a breakaway from normal budget where lots of money figures are quoted. Normally everybody announces schemes in every budget. They normally say so much crores for this scheme and then they say from where will money come from and at the end of the day they say there is uncovered deficit of so much. I was waiting for that and suddenly Mrs Sitharaman realized she has spoken for 2 hours without drinking water so she quickly closed the budget and she said I commend it to the house and she sat down and realized I forgot the main thing and she said sorry 3.3% is the fiscal deficit so it was a little surprising. I will ask my first question to Mr. Kulkarni since he comes from Tata motors, a lot of emphasis in this budget and in the proposal is to the electrification of vehicles so you come from automobile company so I think no better person to tell us, how far is this feasible and what do you think about this whole electrification process.


Mr. Hemant Kulkarni – From industry point of view it is certainly a challenging task but this is not the first time that the government is setting the targets or indicating the intention on full scale electric vehicles, they have been speaking about it since last few years, in fact last 5 years and the writing is there on the wall, the following line loose the benefits and the budget presented gives no benefits to any of the auto businesses except for the electric vehicles. Obviously over the years although the task is challenging people are preparing for it. Many of the organisations are designing and coming out with the product. Some of them also launched some products. What is remaining is scale and that would probably happen as infrastructure for charging and convenience for using it improves. You can see in the budget a lot of provisions are there for rapid installation of infrastructure, there is nil customs duty for equipments and inputs of infrastructure, inputs of direct spares to be used in electric vehicle and the industry will be able to meet the targets, it is different for different segments. Starting from 2 wheelers and 3 wheelers right up to buses each of the segment is at different level of preparedness. The targets that are being set are also different for 2 wheelers and 3 wheelers it is 2025, and little later for four wheelers. Challenging task definitely industry will come out to the expectations.


Mr. Chandramowli Srinivasan – Comments from you all, Mr. Rahul Oza do you have comments on electrification of vehicles and on this initiative by this government.


Mr. Rahul Oza – I would rather say it shows their vision imbated a necessity considering issues because of traffic. Can we see it as over ambitious or as a procession probably can become a market lead, we have Tata with heavy investment in battery research. I think we shouldn’t see everything as negative but Germany totally missed out the agrifications, China is coming up with it. I think we should look at it as a positive vision.


Dr. Debdulal Thakur – See the whole point of this budget is very unique in the sense that, I will say that the outcomes are binary that is if Mr Modi succeeds in whatever he is proposed to, it’ll be a magic if not it’ll be a tragic.. So I mean when he talked about a 5 trillion economy etc. it’s excellent if it happens it’ll be magic but have you ever wondered that what Rahul said or what Hemantji said is fine absolutely possible, if it happens nothing like that but have you ever wondered that if the economy is going to generate amount of trillions of whatever is said the economy is to grow by 12% but from where will money come from? So there is enough doubt about the revenue mobilisation policy and if you say why am I saying so? See there are 3 broad ways through which the revenue can be generated one is domestic savings, the other is tax and last is borrowing. Now on the first 2 counts it is not in a very nice shape at the moment. When economic survey also talked about falling growth rate etc., so growth rate of 12% is actually a kind of writing so that’s why I said it maybe 5% ,it is hard to comment about good part or bad part but if it succeeds it’s magic but if not tragic. So there is time you can always go with it but this is what which is haunting me and many people like me.


Mr. Chandramowli Srinivasan – This leads me to next question, it is the cricket season so the question is has this budget done enough to take on the economy or do you think this the test match budget, than a 5 day cricket than a T20 or 1 day short focus budget again this come from the fact that it has shown a distinct slump from last 3 quarters, from almost last quarter of last calendar year almost festival season till now the growth is just coming down and because this government won big mandate, the expectation was that they will arouse some of the animal spirit, incorporated by doing something bold and to some extent probably that chance has been missed, however the economist may argue fiscal prudence has been maintained. So again my question was is it more of a test match of a budget or T20 or a one day cricket budget. But are you happy with the fact that it is test match budget.


Mr. Rahul Oza – I find all this strange to be honest to compare economy and politics with any kind of sports because if you would compare with it for 90 minutes, everyone sweats it out and yet we are there whether it’s a test match or I don’t know, if you want to take something from sport we would go at a more micro level and say, it’s a team spirit so now the budget is set and each department of the government, it has to utilize the budget and transform, what is the vision, just to see the budget as a Bible or Quran, and for 1 year we will hope that everything will go well is a wrong approach from my perspective, my perspective is that as it is only the allocation of funds and pointing out where do we want to go and now every fielder like law minister, railway minister every batsman have to do their bits and pieces that’s only thing I can compare here with sports, teams probably.


Dr. Debdulal Thakur – This government has played a very safe kind of test match, if you look at the budget the whole idea is, they are talking of fiscal deficit, revenue deficit but fiscal deficit is not always bad so and this whole idea targeting the fiscal deficit and all is fine but if the fiscal deficit is targeted still we put a cap on borrowing. Fiscal deficit, borrowing is used for investment, create new assets it is good, people get new dividends. Similar case is with revenue deficit, proposed to reduce it so the whole idea is that at every point there are checks and balances at whatever amount they have said now the system of borrowing is stochastic in nature, it has its own limitations. So they play safe on domestic front but rather it would have been appreciated if they could have taken some helicopter shot, try to rejuvenate the economy and which could have been doable and instruments which we have within the economy domestic savings or finance minister talked of virtuous cycle etc. but if she would have talked about a clear way out as philosophically it sounds really good, economy survey posts a critical thinking the budget talks about virtuous cycle but there is no clear cut way out so not a very decisive kind of budget which gives us a clear direction. Now whatever they have proposed let them do and let us see how it goes.


Mr. Hemant Kulkarni – This is the first budget after the elections, for any government first budget is the one where they can take a longer term view which may not be very popular in short and that’s what the government has done, they have taken the decision which will affect the nation in a longer way. So from that aspect I’ll say it’s an aggressive budget so I’m unable to compare it with T20 and test match because if we say T20 is aggressive then this budget is aggressive and if I say test match is about playing safe then this budget is not like that but test match is played for 5 days but you plan ahead and what is going to happen on the last day so from that point of view budget takes care of what is going to happen 5 years hence or maybe 10 years hence and it has taken some decisions maybe tough may not come out as popular but still gone ahead with it along with it.


Dr. Debdulal Thakur – See one thing is that everything is not great about budget but there are some good things in this budget too we have seen a portion of something called as future jobs. So when we talk about entrepreneurs so in the previous budget we talked about present jobs or past whatever etc. but in this budget they spoke of entrepreneurs, skill development so which is kind of future jobs which we will be created so this is something ways of hope and hopefully we will be able to generate those kind of employment and thereby and fulfil the target of virtuous cycle yet there are positive points as well but not too many to focus.


Mr. Chandramowli Srinivasan – True actually I have noted a lot of positive points fiscal prudence for example, focus on improving macro-variables, inclusive growth for sure. There is definitely easy credit to take start the economy. There is 70,000 crores for banks, PSU capitalization divestment of government enterprises of course that is there in every budget but we fail. This time again it’s a big amount 1, 05, 000 crores, FDI norms have been released and increased, easier loans to MSE. Many things have been done in my opinion to kick-start the economy. The only thing and this is the comment that two of the newspapers carry, so I’ll like to have your views fair comment, fair criticism one paper said that ‘the speech itself was long about vision, political direction but short on details’ and the second one said ‘their intent is there but the road map seems bit hazy’, so these were the two comments I took from the paper sought of seem to indicate while government is trying to do a lot of things thinking about the long term future, have they put enough short run measures to revive the economy in the very short run just because everyone is very pessimistic, probably everyone was hoping for real boost the economy, or kick-start in a way faster. There are ways but at the end of the day I would describe it as a lift from the grass-root kind of budget, they have done a lot on the bottom of pyramid which is good. It is low on reforms but given importance to inclusive growth. However a lot depends on implementation. As you said Rahul, budget has come and gone we need to take just as it is and we need to go on whole lot of other polities and implementation which this will government will have to do give itself to justify the mandate electoral has given them and to go to 5 trillion economy by itself is not the only thing that the government has to do to whatever it has to do with the economy. So we take the budget as it is and go forward from here. Thank you very much.



Excerpts from the speech of Dr. Renu Shome, Director, The Council of EU Chambers of Commerce in India:


Thank you very much on behalf of the EU Chambers and on my own I would like to thank our knowledge partners of tonight Mr Pramod and Mr Sagar for beautifully explaining the whole budget and our panellists Mr. Oza, Mr. Kulkarni, Dr. Thakur and our very own past president Mr. Chandramowli Srinivasan. I would also like to put a place on records a sincere appreciation to you for making this event happen. As most of the time our activities are in Mumbai and on our members request we thought to organize this event in Pune.

I would like to thank each and every one of you for coming in good numbers in spite of rains also my vice president coming all the way from Mumbai and my colleagues. I would like to officially conclude the event. Thank you.