February 28, 2020
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The Kelkar Impact

The doc's prescriptions are revenue-neutral to the government only if the entire package is implemented at one shot. But there are significant sectoral implications...

The Kelkar Impact
On India Inc
Tax on Indian firms cut to	Biggest beneficiaries: Giants which
30 per cent from 36.75		pay more than 30 per cent of book
				profits as tax. That includes all
				oil companies and big banks, ITC,
				Bhel, Hero Honda, RIL and HLL.
				Biggest hit: those which pay less, 
                                like all IT companies.Their liability 
                                will double.

Dividend tax abolition		Immediate gain Rs 2,500 crore.

Change of depreciation norms	Higher tax and cash outgo initially

Removal of exemptions & holiday	Extra tax of Rs 3,000 crore

On the Indian taxpayer
Only those earning above	Over 21 million assessees, or three-
Rs 1 lakh to be taxed; no	quarters out of tax net, but have to
standard deduction 		file returns under one-by-six

Sections 88, 80L and 10		Post Office NSCs, PPF, power bonds,
exemptions to go; three-year	some mutual funds lose charm; may
phaseout of housing sops	hit household savings

No tax on dividend income,	Corrects Sinha’s mistake; to promote
long-term gains on equity	retail investment in equity 

On the Indian government
Implement farm income tax       Plug a leakage of Rs 1,000 crore,
				enact new law under Art 252

Scrapping standard deduction	Revenue gain of Rs 9,500 crore

Abolition of sec 88 rebates,	Revenue gain of Rs 5,000 crore
housing sops

Cutting corporation tax		Loss of Rs 4,000 crore

Abolition of wealth tax,	Loss of Rs 3,645 crore
MAT, dividend tax	

Depreciation norms change	Gain of Rs 5,000 crore
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