Former Infosys Director and current Chairman of Aarin Capital Mohandas Pai spoke about the various changes within the taxation regime in the Union Budget 2020 including the reduction of income tax across various slabs stating that it would "have a positive impact in putting more money into the hands of the people". The FM announced a new tax regime in the Union Budget 2020 and said, "We propose to bring a personal income tax regime, where income tax rates will be reduced, so now, a person earning between Rs 5-7.5 lakhs will be required to pay tax at 10% against current 20%."
Pai spoke about how liquidity, in terms of the decisions on NBFCs as well as the expansion of the Fiscal deficit would help to push in more funds into infrastructure without raising taxes.
"The personal tax benefits give away 40,000 cr, and 40,000 cr is not insignificant. The fact that even for NBFCs she is trying to increase liquidity to help banks to lend more, I think definitely this will have a very positive impact into putting in money into the hands of people," said Mohandas Pai.
"Also, the fact that she is trying to increase investments in infrastructure and the biggest thing is expanding the fiscal deficit by 0.5%. 0.5% for next year will be more than 1 Lakh crore. 1 Lakh crore will be available without raising taxes and that will go into infrastructure. That will be good news because that spending will increase the demand and that will lead to more money in the hands of consumers," said Pai.
Concluding his viewpoint on the budget, Mohandas Pai stated, "In the Fiscal Deficit fund, she has been bold, especially to get the extra 0.5% I am happy that she has done that. To cut expenditure would have been catastrophic for the economy. Economy plan to grow at about 10% maybe 6.5%, 3.5% inflation is pretty good." He also stated that the measures to increase bank insurance to 5 lakhs was "very welcome."
"As far as taxes are concerned she could have been bold, she has made a mess of the tax slabs and been very timid of creating some 5-6 slabs instead of the 3 slabs. Removing of exemptions is good but she could have been bolder in the tax slabs. Doing a slab for every 2.5 lakhs complicated the matter."
He also stated that the budget was a "total disappointment" as far as startups and companies were considered since the demand for tax parity was ignored in the budget.
Finance Minister Nirmala Sitharaman tabled the Union Budget 2020 in Parliament on Saturday and presented a detailed plan to lift up lagging growth in agriculture and allied sector for rural India. She listed three themes on which her Budget is focussed – Aspirational India, Development for all and a caring society for all.