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Thursday, February 1, 2018

UNION BUDGET 2018 EXPECTATIONS

Taxation

■ FM could well relook the MAT rate or consider abolishing it altogether
■ Reduce corporate tax rate.
■ Enhance tax deductions, exemptions for individuals
■ Tax benefits for salaried class through standard deduction and revision of allowances
■ May tax long-term capital gains in stock market investments
■ Disallowance of expenses on which GST not paid.

Agriculture

■ Establish fund to guarantee credit to encourage investment in agriculture sector
■ Allocate more funds for crop insurance schemes
■ Increase spending for dams and canals, micro irrigation systems
■ Provide subsidies for building cold storage to avoid wastage of perishable crops
■ Reduce fertilizer subsidies

Banks

■ Allow full tax deduction for provisioning of non-performing assets (NPAs) at banks
■ Raise the threshold for tax deduction on interest paid on bank deposits from current Rs10,000
■ Reduce the tenure of tax-exempted retail term deposits to minimum of 3 years from current 5
■ Carve out tax provisions to streamline proceedings under Insolvency and Bankruptcy Code

Infrastructure

■ Increase investment by 10-15% in roads from Budget 2017
■ Provide support for key road projects, including Bharatmala project, which will connect western and eastern India
■ Increase railways investments by 10% from 2017/18 budget

Technology and IT sector

■ Provide greater incentives for digital transactions
■ Support digital payments infrastructure

Auto sector

■ Announce policy on scrapping commercial vehicles that do not comply with emission norms if operational for over 15 years

Real estate sector

■ Set single-window clearance for all real estate projects, especially housing to avoid execution and project delays
■ Give infrastructure status to real estate to help bring down finance, project costs, make homes more affordable
■ Reduce GST rate for under-construction real estate projects from current 12%
■ Spend more on affordable housing

Energy sector

■ Reduce “cess” duty to 8-10% from 20% for oil and gas exploration and production
■ Reduce or exempt city gas distribution companies from excise duty
■ Provide subsidy aid to downstream companies selling LPG, kerosene below market prices

Metals and mining sector

■ Decrease in basic customs duty on coking coal across grades
■ Decrease in export duty on iron ore above certain grade levels
■ Hike basic customs duty on aluminium scrap to protect domestic industry

Gold

■ Cut import tax on gold to 2-4% from 10% to prevent smuggling.

Finally, an interestingly timed Oxfam survey, suggests that, “the richest 1% of India cornered 73% of wealth generated last year,” has added to the apprehensions of wealthy people. It would be interesting to see whether the FM would want to toy with any thoughts on the introduction of inheritance tax, especially after two of the biggest initiatives of DeMo and GST.

…. over to Mr.Jaitley!

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