First impressions on TP positive, fine print and rules to be read though. The FM has stressed that transfer pricing has been a big concern for foreign investors and therefore proposed amendments in the regulations to ensure alignment to international standards. One bold and positive measure is to move from single year to multiple year data - this will enable negotiations under existing MAP and bi-lateral as being aligned to international norms. Specific mention of APAs doing well and therefore strengthening the administrative support to ensure faster closer of these applications will further boost foreign investors to consider this program. Clear mention of introducing a rollback provision to apply the APA agreed for future transactions to similar transactions for past 4 years will enable resolving a lot of litigation and considering APA as true dispute resolution program. Mention of introducing range concept, though continuing with arithmetic mean where comparables are inadequate - seems to also be a positive move. This may result to once again reinstating range as a standard deduction....but let's wait to read the fine print 

The tax proposals are actually moving in the right direction, without changing the fundamental policy. Attempt is being to reduce disputes, and litigations and rationalise taxes which is a major positive. One needs to see the fine print if the expansion of scope of Settlement Commission will take care of retro tax disputes

Hits 
· Increase FDI in insurance, Defence.  Simplified policy changes for real estate. This will send right signals to foreign investors
· Focus on long term lending by banks for infra projects.  Rules for such lending simplified 
Individuals 
· Exempt income limit increase by 50,000 – puts additional money in the hands of individuals in lower salary bracket
· Exemption limit against investment increased by 50,000
· Interest exemption for self occupied property increased by 50,000
Above measures will put more money in the hands of individuals and bring more savings. The real estate sector will benefit. 
Corporate 
· No new tax - the FM has not levied any new taxes which is a welcome step
· Additional investment allowance of 15% for investment in machinery more than 25 crores for 3 years (every year investment to be made 25 crores or more) - this will lead to investment in SME manufaturing sector - excellent capital formation
·  Tax holiday for power sector if generation, distribution transmission begins before 31 March 2017 - this will boost investment in power sector
·  APA – will apply to last 4 years - great move and will provide certainty which foreign investors are looking for
·  Domestic companies can also take advance ruling- will reduce litigation – but require a robust implementation model - the implementation will be a key
·  Pass through tax status provided to REIT – will promote investment in real estate sector also considering that the FDI rules have been simplified
. Taxation of Foreign funds clarified - as capital gains - will boost capital markets 
Misses 
· No concrete steps around black money - however SIT will look into the issue
· Individuals – there were expectations around re introduction of standard deduction for salaried employees – not announced
· No policy guidelines on expansion of tax base - in fact increase in exemption limit may take some existing tax payers out of tax net - better compliance will be key
· Retrospective amendment – no change but assurance given to foreign investors.  Cases to be handled by Committee on senior tax officers
· No concrete steps or roadmap on GST 
Overall, this is a growth oriented budget and will lead to increased investment in manufacturing and infra sectors. Also this will provide more certainty to both foreign and Indian investors.

The two best highlights are – the constitution of high level committee to interact with trade and Industry and CBDT/CBEC to issue appropriate clarification within 2 months wherever required. Secondly, the extension of scope of AAR to resident tax payers and the creation of more benches.

It would be a dream come true if this policy intention translates into reality and given effect to so as to achieve the avowed objective of reducing litigation and achieving a smooth and friendly tax administration.

The idea of a high level committee is indeed big and encouraging. The question would be whether it would have statutory or non-statutory status and its instructions have force of law. Secondly, who would constitute its members? It is true that in democratic societies it is impossible to achieve absolute perfection. Adjustments have to be yielded but not at the cost of quality. The committee should comprise of members from the trade, profession and tax administration and should encourage healthy and transparent discussions to achieve policy and tax stability.

The creation of more Benches of AAR is again assuring. The Government should take one more step. The Act should be amended creating a statutory right of appeal directly to the Supreme Court, without having to approach the High Courts by way of Writs.

The dispassionate thoughts of the High Level Committee and judicious expressions of the AAR will be decisive factors in shaping the destiny of the economic growth and one has to wait and see whether the Government and these bodies encourage the “Shome Approach” or the “Non Shome Approach” 

Huge positives from a tax idea.. The introduction of International TP regime with inter-quartile regime is very welcome. The introduction of AAR for resident taxpayers .and expanding the number of benches could be a game changer. Pass through status to REITS should lead to lots of investment. I am disappointed but not surprised at the retro amendment status quo

While the expectation from the new Finance Minister was to follow the party’s tagline of “ache din”, the indirect tax budget proposals have been more in the nature of maintaining order rather than making policy changes that would benefit the industry. The indirect tax proposals announced by the Finance Minister have been aimed at boosting the manufacturing sector, reducing litigation, broadening the service tax base, facilitation of trade and disposal of appeals. Some of the sectors which have been incentivized include power, infrastructure, shipping and electronics, through reduction in customs duty on inputs and excise duty on output. However, the biggest dampener to the industry would be the lack of clarity on the implementation of GST. Further, the most unexpected proposals of restricting the availment of Cenvat Credit within 6 months, taxing clinical trials and the compulsory pre-deposit for admission of appeals seem to carry the imprint of the bureaucracy that would affect the industry significantly. 

It shows that the present govt. is not in favour of retrospective amendments. Their stand possible could be reflected in Courts also. When there are already committees that have been appointed and who have given their reports, and when the stand of Govt. and FM is clear, what is the need for another Committee?

Even the non-residents are not particularly happy with the functioning of AAR. Unless one creates a good infrastructure with competent people manning it and create confidence building, the institution will not succeed 

In my view, Hon’ble Finance Minister deserves applaud for his stupendous job, given the limited time frame he had to present his maiden budget for Asia’s third largest economy. This budget is a step forward towards inclusive development and to accelerate economic expansion to achieve long term goal of fiscal consolidation. His approach to reduce litigation in the field of transfer pricing and to provide certainty to domestic taxpayers by opening way to obtain Advance Rulings is a welcome move. However, it is also important to highlight the point that though the FM expressed his intention of not believing in retrospective amendments to boost confidence of investor community looking to invest in opportunistic India, he has adopted a measure to burn the pockets of the domestic investors by introducing increased rate of capital gains tax on Mutual Funds and at the same time amending the definition to treat them as short term capital assets if held for the period of less than 36 months. This will impact all FMP investors who have invested previously or whose investments are due for redemption in near future. It is harsh to impose tax mid-term on such investments and to this extent the step of this government is not in favour of Aam Aadmi