Budget Expectations - Sameer Dhanrajani, Fidelity National Financial India

by CXOtoday Staff    Feb 23, 2011

Sameer Dhanrajani Sameer Dhanrajani, Country Head of Fidelity National Financial India, talks about his expectations from the Union Budget 2011 with CXOtoday.com.

Accelerated Infrastructure development
“Extension of Tax holiday to units in STPI, EOUs
The Tax Holiday for units in STPI/SEZ, EOUs and others will terminate this year on 31 March. Extension can encourage business units to set up their new units across India. 2010 has been year of acquisitions and mergers which is estimated to continue this year too. More specific to Bangalore, intent to set up a SEZ in Bidadi industrial town can really build in more room to already overflowing office space. The IT companies have faced huge crunch already with new directives from Obama and global market meltdown in software exports. Extension of Tax holiday beyond 31 March 2011 can act as silver lining for many companies in STPI/SEZ.

A fair 25% Corporate Tax
A fair 25% Corporate tax rate that was voiced out in recent meeting between Finance Minister, Pranab Mukherjee and Business leaders is acceptable given recessionary phase across the globe and rising inflationary rates.

Rising Inflation
Rising Inflationary rate is a big concern for all of us. A recent study that states a 15.57% by January 27, 2011 for food alone. We hope for a revival with new measures taken to curb the inflationary rate.

Post Budget…Ideas to revamp the Indian Corporate Taxation System
Apart from tax rebates and deductions that are available for the corporate, there is a huge scope to draw the best tax system from other geographies to reboot the industrialization in India. Below are few thought provoking ideas not just about tax that may bring about change around us.

Tax Credits and Incentive system
There is a need to develop a law that can give Tax Credits and Incentives to the employers across industry; service or manufacturing, IT/ITES, BPO or KPO who will generate employment opportunities across the country. We are also seeing the rise of Rural BPOs which is a positive sign, but a robust tax credits and incentives system can bring in more engaged citizens across the country.

Outsourcing by Indian Companies
Indian companies have also seen a great potential in outsourcing their activities to focus on the core business. While few are popular, most of them operate below the radar and government should create policies to encourage expansion of BPO/KPOs who are providing service to the Indian companies.

Encourage Micro businesses
One of the recent business magazines has published 100 most lucrative business ideas, out of which 87 can be established right at your door step! Working from home is pervasive in western countries where an employee can choose to work from home. Organizations are looking at various options of having the most tenured employee of an organization work from home which saves costs such as, infrastructure, food, maintenance time savings in terms of people conflicts etc., Government aid to support these micro business can curb the unemployment and develop entrepreneurship in India.

Social costs
Every day we involuntarily bear heavy social costs due to pollution, unemployment and unhealthy human resources to name a few. Government should pass on a regulation to levy tax on all the revenue generating or non-revenue generating units to bear the social cost. While many countries have realized a need to be green, government at the same time can build in tax rebates to encourage more companies to take higher social responsibilities.

Government Support; Cost minimization and profit maximization
There is two-fold approach to revenue generation that organizations adopt as its mother; “Cost Minimization and Profit Maximization”. It depends on what drives the operations further to a cost minimization approach that outsourced partners marry or profit maximization initiatives the captives implement. The macro economic factors such as business environment, corporate taxation policy and government support pays pivotal role in determining the health of an organization.

If there are measures taken to compliment activities that reduce cost of operations or fuel profits; there is a great need to support the industries that act as heart that pumps money into the system while rural India continues to be the back-bone of the nation.”

Budget logo