The Union Budget 2021 is upon us and the temptation for the government to raise taxes is very high due to losses incurred due to the pandemic. Will the government raise direct taxes without making it a heavy load to take on for people? If not, how will the government raise revenue from other sources? BOOM's Govindraj Ethiraj interviews Amit Rana and Girish Vanvari to get a sense of how the Budget 2021 may look for taxes in India.
Amit Rana, Partner (Tax and Regulatory), PwC India, says that he can see little that the government can do to raise direct tax revenue. If they tax the super rich more, it would lead to driving the super rich out of the country. The government will have to be creative in non-tax areas like issue bonds instead of raising taxes & address issues businesses are facing due to pandemic-led disruptions to help service and technology sectors find their feet.
Girish Vanvari, Founder, Transaction Square, says that currently, there is incentive in enabling the common man to have more money in their pockets to enable them to spend more so the government can raise their revenue. The stock market is not the best indicator of an economy in any way. One of the fears is that government may impose a COVID Cess instead of raising taxes. Second fear is that markets are doing too well right now and there may be a case for higher long term capital gain tax on stock markets.