Key Expectations Ahead of India Budget 2018-19 | CORPORATE ETHOS

Key Expectations Ahead of India Budget 2018-19

By: | January 31, 2018
arun jaitley

Every Union Budget raises expectations about new proposals or reforms in some sectors and roll back of some measures and it is not different this time too as Finance Minister Arun Jaitley is giving the final touches to the India Budget 2018-19.

Most analysts expect the budget to raise the income tax exemption limit from Rs 2.5 lakh to Rs 3.5 lakh while a new long term capital gains tax for shares held for more than a year is likely to be introduced. Instead the Finance Minister may withdraw the Securities Transaction Tax (STT) levied on trading in equity derivatives.

Most analysts believe that the budget focus would be on education and rural upliftment in view of the recent Assembly elections that showed some erosion in popularity of BJP in rural areas.

The President’s Address to Parliament before the start of the Budget Session also raised the issue of agriculture. However, Assocham President Sandeep Jajodia had argued that all agri-related or agri-focussed budgets should not be called the populist budget. Afterall, farming is the lifeline of the Indian economy, even though its share in the GDP is just about 15%. As for education and employment generation, the two must go together. The education must involve skill based education which would then translate into job creation.

Meanwhile, Rashesh Shah, President of Federation of Indian Chambers of Commerce and Industry (FICCI) said that the Economic Survey clearly points out the importance of investment rather tan raising saving to reignite growth. Various surveys of FICCI show that private investment is yet to pick up pace and we look forward to positive measures from the Government in the upcoming budget. Most important would be the cut in corporate tax rate, which would not only help industry retain its competitiveness in the current global environment but also encourage fresh investments. FICCI has also suggested creation of regulation free zones, especially along ports to boost new investments in innovative and new-age sectors.

Taxes 
1) Reduce corporate tax rate to 25 per cent from 30 per cent
2) Cut Minimum Alternative Tax to 15 per cent from 18.5 per cent
3) Enhance tax deductions, exemptions for individuals
4)May tax long-term capital gains in investments
Agriculture

1) Establish fund to guarantee credit to encourage investment in agriculture sector
2) Allocate more funds for crop insurance schemes
3) Increase spending for dams and canals, micro irrigation systems
4) Provide subsidies for building cold storage to avoid wastage of perishable crops
5) Reduce fertiliser subsidies
Banks

1) Allow full tax deduction for provisioning of non-performing assets at lenders
2) Raise the threshold for tax deduction on the interest paid on bank deposits from current Rs 10,000
3) Reduce the tenure of tax-exempted retail term deposits to minimum of 3 years from current 5
4) Allow tax relief for proceedings under insolvency code

Infrastructure
1) Increase investment by 10-15 per cent in roads from previous budget
2) Provide support for key road projects, including Bharatmala project, which will connect western and eastern India
3) Increase railways investments by 10 per cent from 2017-18 budget
IT/TECH

1) Provide greater incentives for digital transactions
2) Support digital payments infrastructure
3) Rationalise tariff structure, excise duties for mobile phones, tablet computers
4) Lower GST rates for telecom services to 12 per cent from 18 per cent
Auto
1) Announce policy on scrapping commercial vehicles that do not comply with emission norms if operational for over 15 years
2) Lower GST rates on electric vehicles, currently at 12 per cent

Real Estate

1) Set single-window clearance for all real estate projects, especially housing to avoid execution and project delays
2) Give infrastructure status to real estate to help bring down finance, project costs, make homes more affordable
3) Reduce GST rate for projects under construction from current 12 per cent
4) Spend more on affordable housing
5) Reduce GST rate for home purchases to 12 per cent; stamp duty could also be cut

Oil & Gas

1) Reduce “cess” duty to 8-10 per cent from 20 per cent for oil and gas exploration and production
2) Set more beneficial GST rates for natural gas
3) Reduce or exempt city gas distribution companies from excise duty
4) Exempt LNG imports from paying basic customs duty
5) Provide subsidy aid to downstream companies selling LPG, kerosene below market prices

Metals & Mining
1) Decrease in basic customs duty on coking coal across grades
2) Decrease in export duty on iron ore above certain grade levels
3) Hike basic customs duty on aluminium scrap to protect domestic industry
4) Accelerate minerals exploration

Gold

1) Cut import tax on gold to 2-4 per cent from 10 per cent to prevent smuggling