The Indian economy is facing its biggest slowdown in the last six-year and the future also looks bleak given the prevailing uncertainties in the global and domestic market. Finance Minister Nirmala Sitharaman would be under immense pressure to deliver a budget for a turnaround. The Union budget for the fiscal year, 2020-21 will be presented by Sitharaman on February 1 at 11 am, which is a Saturday, and the Economic Survey will be published on January 31. With the Indian Economy facing headwinds, here major expectations from this year's union budget.
Relief in Income Tax
Last year after the government announced a major tax cut for the corporate sector, there has been a constant demand for a cut in an individual's income tax as well. The step is likely to spur demand in the India Economy that is witnessing a major demand-supply mismatch due to multiple reasons. There are talks in the Finance Ministry that the government may announce some relief in income tax for the individual.
LTCG tax to be scrapped?
One of the irritants for the foreign investors have been the Long Term Capital Gain (LTCG) tax was introduced by the government in FY19. The finance ministry is meeting with all stakeholders to discuss possible removal of LTCG tax. Further, it is also planning to amend the definition of 'long-term' from the existing one to two years.
Fraudulent claims to become a non-bailable offence
The central government is mulling to make fraudulent claims for input tax credit a non-bailable offence in the upcoming budget. In the last few months, the government is witnessing shortfall in GST collection due to illicit refund claims. The government has registered over 1,600 cases involving an amount of Rs 11,251 crore in FY19.
Big Ticket reform in Real Estate sector
Real estate is one of the priority sectors for the Modi government. The real estate fraternity is demanding a higher exemption limit for homebuyers from the current limit of 1.5 lakh (Rs 3.5 lakh for affordable housing announced in Budget 2019). Further, a special fund for this sector which is facing a severe liquidity crunch after the default of IL&FS can also be expected from the government.
GST relief for Auto sector
Auto sector has struggled for more than 3 years now. Demonetisation, increase in mandatory insurance prices, low availability of finances has hit the industry hard with companies sacking thousands of employees. It has been a long time since the sector is asking for relief in terms of lower GST on the auto component which is pegged at 28 percent, highest in the slab at the moment.
Relief from excess regulation for startups
Indian start-ups are one of the best performing eco-system in the country. But over-regulation is currently hampering the industry to grow further. The start-ups are demanding some respite from the tax and regulatory environment. The ecosystem is hoping for a special deep tech venture fund of worth Rs. 3000 crore.