Most Indians are expecting some tweaking in personal income tax exemption limits, a cut in corporate tax rates and focus on spending in rural and infra sectors.
After Economic Survey 2018, all eyes are on what Finance Minister Arun Jaitley will unveil in his last full Union Budget on February 1, before the 2019 elections. Most Indians are expecting some tweaking in personal income tax exemption limits, a cut in corporate tax rates and focus on spending in rural and infra sectors. However, all such relief will depend on the revenue buoyancy of GST, along with fiscal deficit management.
The government is looking at the GST as a boon for revenue collection for FY19. Estimate from GST collection in financial year 2019 will be a key driver for Budget 2018. Whereas some shortfall in GST could be seen in FY18, but a massive rebound is expected in FY19 as compliance is likely to surge after implementation of E-way Bill. A top tax official said to DNA, "After implementation of the E-way Bill and invoice match system, GST revenues will jump, and the government will allocate more money to rural housing."
Taxes
The Government is likely to revise income tax slabs. The current three-slab system may see increase in upper limit — the first slab could be raised from Rs 5 lakh to Rs 6 lakh, taxed at 5 per cent, followed by Rs 6-12 Lakh at 20 per cent rate and lastly, Rs 12 Lakh and above is likely to fall under the 30 percent tax bracket.
A reduction in corporate tax rates is also on the cards. In 2016 Budget, the Union Finance Minister had cut corporate tax rates from 30% to 25%, with phasing out of all tax exemptions. In the last Budget, the tax rate for small companies, with a turnover of less than Rs 5 crore, was reduced to 29 per cent. Such relief in direct taxation will have an impact on personal disposable incomes or corporate profits. Changes in indirect taxes are unlikely, since GST Council now decides the rates.
Capital Gain in Stock Market
In real estate, if you sell any property after three years of holding, the gain is treated as Long Term Capital Gain (LTCG), and it is taxable with some relief. But in the stock market, the gain is tax-free, where one year is the holding period. The Prime Minister had earlier indicated the need for long-term tax on equity profit. The market could see three changes in LTCG of equity market — it could be raised from one to three years with zero tax, could be linked with indexation, and some tax on existing one-year tenure.
Job Creation
The government is likely to announce National Employment Policy for job creation, especially for labour intensive industries. Job creation will be linked to rural development too.
Soumya Kanti Ghosh, group chief economic adviser, said, "As per our reading of things, the Budget should give priority to agriculture, MSME, infrastructure and affordable housing."
Agriculture
The government has already promised to double farmers' incomes by 2022. To fulfill this promise, rural and social spending may see heavy allocations.
Fiscal Management
Government revenue is likely to rise by 7.8 per cent vs 5 per cent in FY18, especially in direct tax and non tax revenue. Government spending may also rise by 6.7 per cent vs 7.6 per cent in FY18.
Budget wishlist
- Some tweaking in personal income tax exemption limits, cut in corporate tax rates and focus on spending in rural and infra sectors is expected
- Estimate from GST collection in FY19 will be a key driver for Budget 2018
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Arun Jaitley-PTI")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}