Budget 2015: A digitally-postured race?

Pratima H

NEW DELHI, INDIA: Yes, there is no change in income-tax slabs and the many other tax footnotes will only increase your pizza or phone bill this year.

However, if you belong to the tech universe by any DNA connect, the Budget 2015 was not all neutral and status-quo there.

Like on the backstage, taxes are supposed to gain speed on the e-route and Finance Minister Arun Jaitley has categorically talked about simplification of tax filing without jeopardizing collections. That, in turn, implies a better tech back-end and also digitization of invoices and the whole process across the spectrum.

This cascades to money laundering malaise too and today’s Budget talked vehemently about how seamless integration, transparency and better tracking constitute a call of the hour. Reduction of red tape and e-nablement of a sharper process framework would make as strong pillars of the government drive to reduce black money as would be a ten year punishment clause or a 300 per cent penalty.

E-filing has been receiving a lot of policy-encouragement in India and it has started a few years back. The CBDT, for instance, in 2013, had made E-filing of Return compulsory for Assessment Year 2013-14 for persons having total assessable income exceeding Five lakh rupees and vide its notifications had exempted salaried employees having total income upto Rs.5 lakhs including income from other sources up to Rs.10,000 from the requirement of filing return of income for assessment year 2011-12 and 2012-13 respectively.

The exemption was available only for the assessment year 2011-12 and 2012-13. The exemption was giving considering 'paper filing of returns' and their 'processing through manual entry' on system.

The facility, however, was introduced by the Income Tax Department for the first time during assessment year 2006-07 itself and steps like firms requiring statutory audit under Section 44AB to e-file their Income Tax Returns or e-filing benefit being extended to all assesses have taken the ambit wide and forward.

Initial struggles on the road entailed issues with downloading, uploading of forms, some level of complexity in calculations and some aberrations on tax computation etc.

The trend has been a major one across the globe and US has been at the forefront of this landscape. Notably, last year’s tab in Washington showed that its Internal Revenue Service received 82 million returns through e-file about 91 per cent of returns filed and only about nine per cent, 8.3 million returns, were filed on paper.

Paper returns have been reducing at a consistent rate there and e-file is being projected to tax payers as the safest, fastest and easiest way to submit individual tax returns at IRS in US. In fact, some data show that since 1990, taxpayers have e-filed more than 1 billion Form 1040 series tax returns safely and securely.

Better transparency and faster transparency are a key part of any country’s tax system, especially when regions like India also struggle on collection and effectiveness of tax revenues.

Moving ahead on the other side of the money cycle, there is an increased thrust on debit cards and credit cards in the Budget with focus on making the society more cashless.

As to where the money would be earned ultimately by the tax payers, well there is more unfolding, like a drive to involve the big 54 per cent of Youth in India with a ‘Skilled in India’ wheel propelling the ‘Make in India’ ambition ahead. Note how Gartner’s estimates remind that that only 20-25 per cent of India’s graduate pool is readily employable. Its Budget expectation list had underlined that the Indian education system and the resultant workforce has moved from being an asset in the early days of the ‘offshoring’ IT wave to being a liability today.

“We produce armies of ‘doers’ when the need of the hour is to create larger numbers of ‘thinkers’ and ‘creative talent’. The education system needs a major revamp to move the next generation of students away from the ‘do as you are told’ mindset to one in which they are encouraged to ‘think for themselves’. We have hidden for too long behind the fig leaf of Indian culture and the ‘respect for authority’ which drives the ‘do as you are told’ mindset.” It had cautioned.

So, yes, now on the D-day we can see plans announced to use IT for accelerating scholarships and financial aids to students in India.

Entrepreneurship, start-up ecosystems etc have also been encouraged with e-business portals, SETU schemes and the likes. Think of a corpus of 1000 crores for pushing IT start-ups and Rs. 150 crore for an IT hub and you know what this means.

And of course, there was mention of deepening the optical fibre network for a stronger and more digital India. This is intended to run deep, reaching Indian hinterland with a target number of some gram panchayats by Dec 2016. Also, this will span all across India including a thrust on North Eastern states, Andhra Pradesh, West Bengal and more.

Interestingly, a quick glance at some industry expectation lists shows that top-level policy issues have gone in tandem with wishes. Like Pradeep Nair, Managing Director, Autodesk, India & SAARC’s expectation that the budget will provide significant impetus to the ‘Make in India’ initiative and importance of simplified approval processes, promotion of industrial clusters, a clear roadmap to a unified domestic market through GST. M Lakshmi Narayan, Managing Director, HARMAN India had also expected the ‘Make In India’ mission to take roots.

Partha Iyengar, Vice President and Head of Research - India, Gartner alongside, had highlighted that the biggest expectations for the IT industry will be to put teeth behind the two slogans of ‘Digital India’ and ‘Make in India’.

He had noted, “The ‘Digital India’ initiative has huge ramifications for the Indian IT industry and Indian industry overall as well. It will (hopefully) been better access to the vast areas of untapped rural India, which can drive unprecedented economic growth across industry, by allowing companies across all industries to tap the elusive ‘bottom of the pyramid’ economic opportunity. Country level infrastructure improvements needed to drive ‘Digital India’ will also help spur industries embrace of the digital business paradigm, which will increasingly be a competitive imperative in the coming decade, as digital business hastens the demise of ‘geographical reach’ as a competitive barrier.”

So, all in all, the policy-view looks as one that is moving forward on the technology map even though the details of on-ground execution and benefits will take time to roll.