Budget session is soon going to start in the parliament and we are ready to see some if new and clarified tax policy as many media reports suggest. The main and important one is the hike in income tax slab structure.
To provide benefit to the middle class and salaried group, this Budget may bring a new ray of hope in the form of increased slab structure. The current minimum tax slab is 2.5 lakh per annum, which could be increased to the 3 lakh per annum according to media reports. While this may be the single largest effective measure policy for the government but it will reduce the government reserve which has limited scope in earning money.
There is also a talk of taxes on shares, which may be reintroduced this year in the Union Budget 2018. This is the last budget for the NDA government and they will look for satisfying all the major bases in the country. It will be practically a hard test for the government to create a balanced Budget for all the sectors.
They will also have to see a few of their pet projects such as clean Ganga and swacch Bharat, which demand a considerable fund for the implementation and operation. While the corporates would be waiting to seek more clarification in the working of GST and reduction in the corporate tax, this may look highly unlikely that corporates tax are going to be reduced.
The sectors which need a big boost are manufacturing and export. This Budget will be particularly critical in this domain. The capital infusion in the public sector utilities will be one of the stable features of the budget. The recent announcement of government to bring electoral bonds to bring transparency in the electoral spending and political funding is a huge step considering the recent developments in the country.
What many experts suggest that giving relief to the middle class will be one of the important features of the Budget 2018.
The Budget 2018
Given the recent tax cut for the corporates in the US, it will be exciting to see how India balances its corporate tax structure. Whether it will reduce its corporate tax to attract investment or do not change at all.
As the Budget session nears in the parliament, major business lobbies have started forwarding their proposal to the finance ministry. Everyone in the business industry is aware of its problems including mutual funds, insurance and manufacturing and they have forwarded their message to finance ministry to be included in the budget 2018. While NITI Ayayog has warned about the populist spending which can create serious trouble for the economy.
The populist schemes will be a burden to the economy if pursued the longer term in every session. The government has to meet its fiscal deficit target of 3.2 % which is looking difficult given the current economic conditions. The Budget will set the tone for the future policy guidelines in the coming year as well as indicate the intentions of the Present government.