With major emphasis being given on agriculture, infrastructure, water resources, sanitation, MSME, Start ups, it seems to be sound with no major fireworks. Reduction in Corporate Tax to 25% for companies upto 400 crores turnover which will almost cover 99% of the companies will give some solace to the trade & industry. The budget promises doing away with the distortionary and contentious so-called ‘angel tax’ imposed on the startups. Not only was the dead weight cost of this tax pretty high as it was taxing risk capital, the implementation was too adhoc and depended on the discretion of the assessing officer.
The additional surcharge on high income individuals effectively creates a new tax bracket which goes upto 42%.The implication of this measure on tax compliance, saving and investment remains to be seen & hope that this is a temporary deficit management measure, and it may be rolled back in future budgets. To further discourage cash withdrawals TDS of 2% is introduced on withdrawals above Rs 1 crore from single bank account.
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