While India is busy celebrating multiple festivals in the month of September, the Government commences the mammoth task of tabling the annual Union Budget to be presented in February. Abki baar , all eyes are yet again on the Modi sarkaar which seems to have a plethora of policies up its sleeve to appease the masses, classes and corporates. All this takes place amidst a volatile global economy, coupled with turbulent oil prices.
Exemptions and benefits
To combat inflation and manage savings, the common man is hopeful of an increase in the tax exemption limit to ₹2.5 lakh from the prevailing ₹1.5 lakh, as well as a reduction of lock in period of tax-free term deposits to one year from five years. On the home loan front, an increase in deduction on interest on housing loans from the existing ₹2 lakh, and additional tax benefits on repayment of principal loan amount under section 80C would help a considerable amount. For the white-collared work force, a rationalised tax structure, a check on core CPI inflation, and incentives to drive entrepreneurship are the key takeaways.
What’s in store for corporates
It is a wait and watch phase for corporates as they look forward to an official announcement of a 5 per cent drop in taxation, from the existing 30 per cent, within the next four years. Tinkering with long-term capital gains, or an increase in the securities transition tax is deemed to be disastrous for capital markets as this would scare off those investors seeking liquidity (both retail and institutional). As it is, the Sensex is treading on extremely rough terrain owing to the ongoing unrest in global economies, fluctuating crude oil rates and the declining growth of countries.
GST and MAT
Along with the multiple initiatives taken by the government to boost investment in infrastructure, abolishing the Minimum Alternative Tax for this sector is cited to speed development. At the micro level, clarity is sought on issues which have haunted multiple government regimes in the past such as the proposed GST, One Rank One Pension (OROP), stringent policies to tackle black money recovery, sophisticated weapons for the Armed Forces, core assistance to the agricultural sector, and debt-ridden farmers.
Addressing national issues such as the JNU issue, the Rohith Vemula issue, the Pathankot terror attack, and the issue of Jat reservation should also be on the government’s checklist. At the macro level, clear-cut policies to tackle faltering PSU banks with burgeoning NPAs, job creation opportunities for the youth, a roadmap for fiscal policy consolidation and government borrowing programmes should be sought.
It’s all about the Indian start-up
Sectors which are most abuzz with activity are the start-ups and e-commerce sector and the tepid manufacturing sector. These are the ones which are definitely expecting positive sentiments from the Budget. The impact of initiatives launched by the NDA government such as Make in India, Swachh Bharat Abhiyaan, PM Awas Yojana, Start-Up India, Smart City Mission, Skill India Mission, Digital India Programme, and Pradhan Mantri Jeevan Jyoti Bima Yojana, among others are also being keenly monitored.