Shortly after presenting the Union Budget 2012, Finance Minister Pranab Mukherjee, admitted that the budget really misses the Direct Tax Code.
However, he revealed that had the standing committee submitted the DTC proposal earlier, he would have made an effort to pass it in the Budget. But since it was only submitted a month back, the ministry will take some more time to go through the recommendation.
While the Finance Minister kept the budget realistic overall, he has failed to deliver on the much-awaited Direct Tax Code and Goods and Services Tax reforms. The GST is nowhere near to its finishing line, whereas the DTC may be ready by next year.
Though the DTC was not introduced, notable changes were made to the direct tax laws in the new budget to tackle the Vodafone type overseas transaction of domestic assets and the transfer pricing issue. Hence it is observable that a road map towards the DTC is there in the budget. On the other hand, on the GST front, the major development is the harmonization of excise duties and service tax to a uniform rate of 12%.
On GST, however, the FM pointed out that it is a time-consuming effort as it requires a political consensus. ” Cooperation of the states is also needed before giving final shape to the GST. He added that the government has made progress and is currently working on mode legislation to ensure a common platform for GST.
On the macroeconomic front, the Finance Minister pointed out that it is wrong to link high inflation with economic growth growth rate. “High inflation and current account deficit need not be linked with high growth rate.” Unlike 1991, India has a high growth and saving rate now, he said. Admitting that the current situation is difficult, Pranab-da assured that there is no reason to panic.