Bantwal Ramesh Baliga, CEO, Watertec India shares his take on the Union Budget 2020-21 by underlining key proposals that are likely to have a multi-faceted impact on stakeholders.
How will the Budget proposals impact your company vis-à-vis vendors, employees, end-customer, investors, and others?
Our company shall benefit with the proposed changes in Dividend Distribution Tax (DDT), which shall be utilised for investment in capex, promotional expenses and other productive areas. With more investments and opportunities for the growth of the company, there will be long-term benefits for investors, employees and other stakeholders of Watertec.
To provide significant relief to the individual taxpayers and to simplify the Income Tax law, it was proposed to bring a new and simplified personal income tax regime, wherein income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions.
The alternative tax structure would also help our employees who are not presently having any standard deductions. This will leave significant money in the hands of the employees who can plan for consumption and spending.
What will be the likely impact on your industry?
With the extension of tax holiday for one more year for housing loan on budget houses, there will be a positive impact on the real estate sector. And it will throw up more opportunities for the allied industries such as bath fittings, pipes & fittings.
The intent to provide relief to the individual taxpayers and simplification of tax provisions will improve cash flow for the individuals. It will definitely help construction industries to a good extent. Continuing with the last Budget’s focus on affordable housing, tax benefit on affordable housing loans would be extended by a year to loans sanctioned till March 2021.
This will push more first-time homebuyers to enter the market. Additionally, the date of approval of tax holiday provided to developers of affordable housing would also be extended by a year. This would encourage more and more developers to transition into affordable housing, as the luxury segment is already reeling due to overexposure and under consumption.
How will the proposals impact the economy?
The changes announced in DDT, moving its incidence from the company to the recipient, coupled with corporate tax cuts announced in September 2019 will boost India’s attractiveness to investments, especially by foreign companies. Extension of tax holiday for budget houses will have a positive impact on the growth of real estate and its allied industries and the banking sector.
The proposal to set up large solar power capacities alongside rail tracks and enabling farmers to set up solar power generation capacity on their lands will provide growth opportunity for the renewable energy sector.
Providing saving and investment opportunities to the salaried class will improve their cash flows. Housing for everyone by 2022 would be the long term plan for the government, and our sector would be benefitted immensely if the Budget improves the economy of the country.
In conclusion, healthcare, public transport, road and waterways, power generation, all get a much-required boost. Increased government spending in these areas will thus help generate jobs. Money in the hands of honest taxpayers will hopefully revive consumption and drive the economy.
The construction industry has now a great new opportunity to explore their skills in infrastructural developments, taking India ahead with the state-of-the-art transport systems. Infrastructure development will help create more cluster developments along the way.
Also Read: The Transformation of Watertec