According to SBI Research, a wealth tax or any other new tax will do more harm than good

January 20, 2022 | xpath.global

Image: unsplash.com

SBI Research has warned that any new tax, such as a wealth tax or others, could cause more harm than good at this time, ahead of the Union Budget, which will be submitted in Parliament on February 1.

If the LIC disinvestment is approved in FY22, the government might end the fiscal year with a substantial cash position of Rs 3 lakh crore.

This might help finance a major portion of the government’s budget deficit without resorting to market borrowing, according to the paper.

“We caution that any new tax like wealth tax or others at this point could do more harm than benefit,” it said.

SBI Research estimates that 6.33 crore MSME units in India contribute 29 percent to the country’s GDP and employ over 11 million people.

It stated that banks should be authorized to lend to SMEs if they have a reliable source to verify cashflow and have real-time access to GST 4/ITR.

Separately, the government’s provision of real-time information for a company/borrower through a regulatory architecture from various sources such as income tax, Ministry of Corporate Affairs (Registrar of Companies), Customs, land records, SEBI, credit information companies, banks, and courts (for legal cases if any) will significantly improve informed credit decisions for all borrowers in the future.

The COVID-19 pandemic has reignited interest in the MSME sector, resulting in a behavioural shift in bank lending to these businesses that has exceeded all expectations thanks to the government’s ECLG scheme.

The Emergency Credit Line Guarantee (ECLG) scheme should be extended until FY23, with the required regulatory changes. According to SBi Research, this will also allow the entire Rs 4.5 lakh crore credit flow targeted under this scheme to be completed.

Furthermore, considering the CGTMSE federal guarantee scheme’s limited performance in anchoring SMEs over its two-decade-plus existence, the Budget should consider reorienting the institution along the lines of the US Small Business Administration as a facilitator for SMEs establishing and expanding businesses.

Read full article here.

    Related posts

    tax risks
    compensation and benefits global mobility
    RECENT POSTS
    • GDPR Best Practices for Employee Mobility within the EU
      GDPR Best Practices for Employee Mobility within the EU

      April 12, 2024

    • Belgium’s New Immigration Policies: Minimum Salary Requirement
      Belgium’s New Immigration Policies: Minimum Salary Requirement

      April 12, 2024

    • Key Considerations for Tax and Social Security Compliance
      Key Considerations for Tax and Social Security Compliance

      March 28, 2024