8 Things to Watch Out for in Union Budget 2018-19
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The countdown has begun for the NDA government to unveil the last budget of its tenure for the 2018-19 Fiscal Year. The Union Finance Minister Arun Jaitley will be presenting his fifth and final Budget tomorrow in the Parliament. With the General Elections slated to be held in 2019, expectations from this year's Budget is manifold.
While the Chief Economic Advisor, Arvind Subramaniam emphasized on the need for fiscal consolidation and macro-stability in the Economic Survey tabled on 29th Jan, many believe that the budget will have sops to boost rural economy and much more.
Here are the 8 things to look out for in the 2018 Union Budget.
- Incentives for Digital Payments
The last year had witnessed a constant push for digital payments from the government's end after the demonetization drive. And, even this year, industrialists in the digital payment space are optimistic about the continued push and the extra incentives for digital payments. The President of Digital Lenders Association of India and CEO of Indifi Technologies, Alok Mittal said, "Expanding the coverage of Mudra and other credit guarantee schemes to cover new age business models and fintech platforms will help the sector get more access to credit and digital existence. Secured API access to customer information using GST system and simplification of GST will be an additional benefit."
- Reduction in Corporate Tax for Startups
Since 2014, the Narendra Modi government had lent its support to the startup ecosystem in the country. For this year as well, the startups are positive about the deduction in corporate tax in 2018 Budget. CEO and Co-founder of Tone Tag, Kumar Abhishek said, "We expect a reduction in Income Tax for individuals working in companies promoting the startup ecosystem. The changes could also include measures to improve digital literacy and provide high-speed internet to every citizen and empower them with access to mobile internet."
- Capital Allocation for Smart Cities Mission
With the Smart Cities Mission on the cards for this year's Budget, industrialists are expecting a major push to the manufacturing companies in India. Rajiv Bhalla, Barco Electronics Systems told Entrepreneur India, "For India to become a global manufacturing hub, the government will have to ramp up its efforts to provide essential support for the 'In Country, For Country' companies. Creating an environment where businesses can thrive will encourage more players - both indigenous and international, to explore the possibility of manufacturing within India."
- Individual Tax Should be Lowered by At Least 5%
The government may tweak income tax slabs to bring down the tax burden on individuals in the country. Reduction in individual tax rates will lead to more spending and consumption by the middle-class in India. "If the individual tax rates are lowered by at least 5% in the Budget 2018, the purchasing power of the common man and small entrepreneurs will see an increase," said Nikunj Turakhia, President of Steel Users Federation of India.
- Doubling Farmers' Income
President Ram Nath Kovind recently spoke about reducing agrarian stress on the Indian economy and doubling farmers' income. The 2018 Union Budget may see a heavy allocation on rural and agrarian spending.
- Lower GST Rates on Electric Vehicles
With the rising pollution level in the country, the government might dole out incentives to promote electric vehicles in India. The industry players in the auto industry are hopeful of the reduction in GST and extension of tax benefits to consumers on the purchase of electric vehicles in India. The discussion on the topic was going on for a long time. The government may lower tax rates to 5% from the existing 12% GST.
- Reduction of GST on UCP (Under Construction Projects)
The rollout of GST and the aftershocks of demonetization has crippled the real estate industry in the past two years. The builders in the industry are hopeful of a further reduction of GST on Under Construction projects to accelerate demand. The Government is also looking at reducing taxation to provide affordable and low-cost housing units. Director of Duville Estates commented on pre-budget expectations saying, "There should also be incentives for construction of green buildings, keeping in mind the challenges to the environment; government should offer higher FSI and exemptions to promote green sustainable developments."
- Relaxations in interest rates on business loans to MSME players
The financial inclusion for the MSMEs is high on agenda for the flourishing growth of 48 million MSMEs in India. "The rate of interest for business loans offered to MSME players is higher than other types of loans such as housing, education and others. In order to bridge the credit gap in the sector, relaxation in interest rates are urgently needed to make MSMEs more competitive," R Narayan, Founder and CEO, Power2SME.