Budget 2018: Here are top 10 expectations from FM Arun Jaitley

The clock is ticking, on the eve of Budget day 2018, everybody's talking about their expectations from the Finance Minsiter Arun Jaitley. 

As 2019 polls are drawing nearer and the Modi government will be presenting its fifth and final budget, many believe that the Budget will have sops and will be focussed on rural economy. 

Below we have listed out top 10 expectations from the Union Budget 2018

1. In a pre-budget survey by tax consultant EY, a wide majority of 69 % of the respondents felt that the threshold limits for taxation would increase further in order to boost disposable income in the hands of the people.

2. In Budget 2018, the government could provide a big relief to the middle class – especially the salaried section – with a new tax slab. Of the 76 lakh individual assessees who declared income above Rs 5 lakh in last financial year, 56 lakh were from salaried class.

3. The current three-slab system may see an increase in the upper limit: The first slab's upper limit could be raised from Rs 5 lakh to 6 lakh, taxed at the rate of 5 per cent; followed by Rs 6 to 12 lakh at 20 per cent; and Rs 12 lakh and above is likely to fall in the under 30 per cent tax rate. "Though the government is under financial constraint, it could be an option to cut some tax exemptions and align the slab to simplify the tax law," a Finance Ministry official told DNA money. 

If this happens, then taxpayers who make more than Rs 6 lakh a year will get a tax benefit of Rs 15,000 annually, according to tax expert Dr Ravi Gupta.

The Finance minister may increase the basic exemption limit from Rs 2,50,000 to Rs 3,00,000. 

4. India's the largest bank, the State Bank of India, demanded that the basic tax exemption limit be raised. "Personal disposable income has increased due to the 7th Pay Commission. We believe there is a need to raise the exemption limit to Rs 3 lakh; through this about 75 lakh taxpayers will be exempted from income tax," said Ecowrap, an SBI research note.

5. The Ministry of Road Transport & Highways (MoRTH) could see a substantial increase in fund allocation in the Budget as the government looks to begin implementation of its ambitious Bharatmala project.

6. 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.

7. 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.

8. 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."

9. The government has already promised to double farmers' incomes by 2022. To fulfill this promise, rural and social spending may see heavy allocations.

10. 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.