Finance Ministry of India will soon unveil its interim budget on 1st of February 2019. Traders and common masses are high on hopes with great expectations soaring around. Tax paying population is hoping for a substantial relaxation and if reports are to be believed, the finance ministry may double the income tax exemption threshold from the present Rs 2.5 lakh to Rs 5 lakh.
Finance Minister Mr. Arun Jaitley may also announce heavy relaxation in medical and transport taxation, thereby ensuring great relaxation for general public.
Income Tax Reform
Finance Ministry may also introduce Direct Tax Code, which will essentially replace the Income Tax, 1961, consequently making tax rates more dynamic for people in the 5% and 20% IT slabs.
Long Term Capital Gain (LTCG) reform is expected to intensify this year, continuing its stride from previous year’s budget terms. According to market trends, industrialists are expecting LTCG on equity returns, thereby demanding LTCG availability in investment for ULIPs and NPS too. .
The upcoming interim budget is expected to stay more around GST and its better implementation in the areas of SME. I believe pushing GST exemption limit to Rs. 40 L will greatly help the Indian economy and will surely help numerous SMEs, consequently attracting them to file annual returns and pay a simple quarterly tax.
Other than a proposed lower GST tax structure, the Govt. can also bring some reforms to increase online accounting and online tax calculation procedures for easy compliance regime.
Petroleum under GST: Considering the energy sector, government of India has long adjourned the process of bringing petroleum products under the GST slab. It is an evident fact that not just energy sector but all major production units in India are dependent on international crude oil prices. It accounts for a huge dent in Indian economy and can only be corrected by considering Oil and energy sector under Good and Service Tax.
GST Exemption in HR department: Apart from products and service sector, Govt should also consider an appreciable tax relief in the human workforce sector. In the forthcoming interim budget, Govt can provision new guidelines for HR benefits (employer-employee sector) to create a win-win situation for both employee and employer.
The GST bill has already been considered as a great catalyst for the Make in India initiative, due to its effect on indirect taxation like excise duty, service tax, value added tax (VAT), Central Sales Tax (CST), purchase tax, octroi, entry tax etc. In the upcoming budget, Finance Ministry should plan on reducing the GST rate on Make in India products/services and cut down the slab from 18% to 5% to provide increased benefits to indigenous businesses and enterprises.