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Consolidated KPMG Statements on Union Budget 2017-18

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Statement from Girish Vanvari, Head of Tax, KPMG in India

 Budget 2017  sticks to fiscal prudence with a fiscal deficit of 3.2% whilst balancing enhanced spending in several socio economic schemes and different aspects of economic development.  There is some cheer for individuals as tax rates for income between 2.5 lakhs to 5 lakhs has been reduced from 10% to 5% .  However an additional 10% surcharge has been introduced on income between 50 lakhs and 1  crores which is a dampener for high networth individuals.  MSME with turnover upto Rs 50 crores will benefit from lower tax rate of 25% and there are some concessions to boost the real estate sector.  The trust of the budget is to enhance the tax base and move towards digitization through several amendments in the act.  No change in capital gains tax regime for listed stocks and clarification on non-applicability of indirect transfer rules to FPIs and AIFs will be a big relief to the investors and could trigger an immediate rally on the stock markets.  One can argue that the Budget could be more ambitious at the cost of fiscal prudence.  However, in global macroeconomic backdrop, the calibration in the Indian economy post demonistation and much awaited GST which is now on anvil, Budget 2017 is stable fine balancing act, with fiscal prudence, directional spending and no surprises on the taxation front which should lead the country to a sustainable growth path.

 Neeraj Bansal, Head of Real Estate and Construction, KPMG in India

 FM has reduced the holding period for land and building from 3 years to 2 years for long-term capital gains purpose. This would help improve invest ability in properties in comparison to shares and stocks where the period is 1 year.

 Union Budget: Real estate grabs the centre stage - Neeraj Bansal , Partner and Head of Real Estate and Construction, KPMG in India

 The announcements in Union Budget 2017-18 provided the much necessary push to housing affordability. Host of incentives to propel demand, streamline direct tax related issues, and promoting low-cost housing in both urban and rural regions were announced which were in-line with our expectations.

 Among the most important announcement was granting of infrastructure status to affordable housing development – a long pending demand of the sector. It has been complemented by increasing allocation to rural housing programme by more than 50 per cent.

 By granting Infrastructure status to affordable housing, the Government acknowledges that affordable housing industry is an important driver of the economy. Affordable housing developers will now be eligible for several Government incentives, subsidies, tax benefits and most importantly institutional funding. The status could also mean that the Government may release land specifically for affordable housing development in central locations of major urban centers in India.

 The budget provided limited incentives on personal income tax side for income of upto INR50 lakh. Introduction of surcharge of 10 per cent on income above INR50 lakh is expected to reduce disposable income further. Further, the budget was also silent on incentives to boost REITs, rental housing and commercial real estate asset.

 Statement from Neha Punater, Partner and Head of Fintech, KPMG in India

 The Govt. has continued the demonetization initiative to promote digital and cashless payments with a slew of initiatives in the budget. It has addressed all the components  – from incentivizing the customers and merchants for using BHIM to furnishing of PAN for cash transactions over Rs. 3 lakhs to promoting infrastructure creation by duty exemption on POS machines and iris readers.

 The Aadhaar enabled merchant payments would ensure that supply side is also addressed for a digital transaction. We see this a definitive boost for the digital economy.

Statement from Nilaya Varma, Partner and Head, Healthcare, KPMG in India

 Many of the targets set by the Government for healthcare is very welcome and so is the focus on wellness, creating more clinical staff and leveraging existing assets. However, we need to see what is the real extra allocation for making these announcement happen… would have appreciated comment on plan for universal healthcare and infrastructure status.

Statement from Nilaya Varma, Partner and Head, Government  and Healthcare, KPMG in India

 Model Contract Farming Law, if designed well, has the potential to impact the entire farm value chain including better realization to farmers, bring new investments in farm infrastructure and reduce middlemen.. Incentivization needs to be built for states to implement this fast in letter and spirit.

Statement from Dr. Jaijit Bhattacharya, Partner – Strategy and  Economics, KPMG in India on Infrastructure sector

 Budget 2017 has focused on infrastructure, including digital infrastructure, increasing private investments, increase consumption and strengthen social sector and safety net, including health and education. The key feature of the budget appears to be several declared deadlines for outcomes such as elimination of TB by 2025, removal of unmanned crossings in railways by 2019 etc. This makes the budget more accountable and it's impact and progress can be tracked over a period of time. The budget appears to be able to achieve its stated objectives and would help in growth of consumption and infrastructure development.

 Statement from Neeraj Bansal, Partner and Head of Real Estate, KPMG in India on Infrastructure status to affordable housing

 By granting Infrastructure status to affordable housing, the Government acknowledges that affordable housing industry is an important driver of the economy. Affordable housing developers will now be eligible for several Government incentives, subsidies, tax benefits and most importantly institutional funding. The status could also mean that the Government may release land specifically for affordable housing development in central locations of major urban centres in India.

 Statement 2 from Neeraj Bansal, Partner and Head of Real Estate and Construction, KPMG in India

 FM has reduced the holding period for land and building from 3 years to 2 years for long-term capital gains purpose. This would help improve invest ability in properties in comparison to shares and stocks where the period is 1 year.

Statement from Santosh Kamath, Partner and Head of Renewables, KPMG in India

“The push on Phase 2 of the national solar programme of 20,000 MW reiterates the Government’s commitment to this sector. The move to expand solarising of the railway stations also sends an encouraging signal to rooftop and distributed solar.”

Statement from Biswanath Bhattacharya, Partner, Infrastructure and Government Services, KPMG in India

 The set of initiatives announced seem to acknowledge the challenge that Railways is losing share in both freight and premium passenger services to alternate modes of transport, and hence an integrated approach to improving safety, cleanliness and passenger comfort, and higher levels of service to freight customers through end to end services have been introduced in this budget. The introduction of accounting reforms will also facilitate better management control systems, to track performance improvement, of the Railways.

Statement from Narayanan Ramaswamy, Partner and Head of Education and Skill Development, KPMG in India

 The focus on Education and Skill Development in this budget looks at best cursory and customary. There are some bright spots with the set-up of Innovation fund for local innovation in school education, more colleges will be identified for autonomous status and a national testing agency for all entrance exams. There are some announcements of new schemes for leather and footwear. The outlay is not known for these schemes.  The 4000 crores for SANKALP targeting 3.5cr youth, Rural Mason training scheme targeting 5lakh youth by 2022 are encouraging. Given the mammoth requirement for skilling and urgency of the need, it is disappointing to see this budget virtually ignoring the support and encouragement needed for skill development and vocational education.

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