Budget 2025: Simplify Tax Policies, Increase The Base, Says Prashant Khemka

As the government prepares for the upcoming Budget 2025, Prashant Khemka, the founder and managing director of WhiteOak Capital Management, shared his thoughts on what steps the government could take to enhance the country’s growth prospects. According to the market veteran, simplifying the tax structure and broadening the tax base should be a priority for the government in the upcoming budget.

In his view, India has a significant opportunity to improve tax compliance and increase its revenue through better policy design. "The government should simplify the taxation policy and broaden the tax base," he emphasised.

However, Khemka acknowledged that this would be a challenging task, especially on the political front. "It is politically not easy to broaden the tax base and that is why the there is the importance of GST," he added.

Khemka sees GST as a key instrument in expanding the tax base, stating, "The government has to collect taxes and GST is the best way to broaden the tax base." He further stressed that, despite challenges, GST remains a vital tool in helping the country meet its fiscal objectives. “GST is something we cannot reduce, we must collect the tax, and GST helps in doing so,” he said.

On the topic of taxes on equity markets, Khemka urged the government not to impose additional taxes on the sector, especially given the already high rates in place.

"I would hope the government does not further increase taxes on the equity market; we are one of the highest already in the world," Khemka remarked. He emphasised that India’s effective tax rate on equities is among the highest globally, and any further increases could potentially harm the market.

On the global economic environment and how it could impact India, Khemka expressed his optimism about the potential for a positive shift with the re-election of former U.S. President Donald Trump. Despite the political divisions surrounding Trump, Khemka believes his policies in the first term were beneficial for both the U.S. and the Indian economy.

"We are at about average levels compared to the last 10 years, so I do not see any worry," Khemka said, acknowledging the current market volatility. He highlighted that while the global uncertainty has increased, especially with U.S. politics, the re-election of Trump is likely to be positive for U.S. corporate earnings, and by extension, for global markets, including India.

"Trump's actions may have been negative for certain markets like China, but for India, Trump’s actions were positive, and I am positive that his actions will remain positive for India again this time," Khemka said.

The ongoing "China Plus One" strategy, Khemka pointed out, could further benefit India, making it an attractive destination for investment. He noted, The anti-China rhetoric, if it transpires as it did last time, India will be a key beneficiary.

Despite the changing geopolitical landscape, Khemka remains confident about India’s long-term growth trajectory. "The Indian backdrop will continue to remain firm over the coming several years," he said, emphasising that India is well-positioned to continue its growth story. In fact, he believes that India's market offers great opportunities, particularly in the medium to long-term horizon.