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Budget 2013-14 should rationalise indirect taxes
February, 19th 2013

Given the current challenges, what, in your opinion, would make for a good budget? What measures or proposals would you like to see?

Clarity and consistency in government policies and the executions thereafter are more essential than the annual budget in the perspective of the India story. India has missed out on a smooth baton changeover from the IT (information technology) boom to a promising Infrastructure boom due to reasons that are not assignable to the budget exercise alone. In terms of the budget, I would welcome more tax incentives towards both urban and rural infrastructure, including roads, power, waste management systems, education, agriculture, health care and hotels, among many others. There should be a clear path on ways and means to control the fiscal deficit in the near term. The slabs for all tax rates should be increased in order to ease the impact of freeing cooking gas prices and raising petrol and diesel prices. There should be clear timelines for the introduction of GST across India.

Given the constraints the government faces in raising revenue, do you see a case to increase income tax rates on the rich?
This is contradictory to allowing people to create capital. It is contra growth.

Please identify the cut-off in income beyond which you would classify the person as rich.
If at all, an additional education and health care cess may be applicable on individuals having an income in excess of Rs 2.5 crore per annum for a period of three to five years.

If the budget does not meet expectations, do you fear that business sentiment would once again dip?

Specific to your sector, what could the current budget do to improve conditions?
Recently the RBI announced that ECB (external commercial borrowings) could be used to refinance debts for projects over Rs 250 crore. This has been done keeping in mind the provisioning problems that larger debts have on banks' balance sheets and not so much on the problems faced by the hospitality sector. This ECB refinancing opportunity should be available for lower project sizes as well, since mid-market and smaller hotels are as affected by higher interest rates and require such debt refinancing options as well. Our hotels are being set up in pilgrimage destinations in tier-3 locations, where power and skilled labour are a challenge. Therefore tax incentives towards captive generation and skill development that will provide additional employment will be welcome. The hotel industry is desperately looking forward to the rationalisation of indirect taxes such as luxury tax, service tax, VAT (value added tax) and excise fees on sale of liquor to promote India as a favoured tourist destination.

Which budget, in the recent past, do you remember as having been a good one?
Development and growth are continuing processes and not dependent on a single event like a budget. All budgets have their own significance at that point in time and cannot be compared since extraneous factors are dynamic and not constant.

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