Union Budget 2017 is one of the most desperately awaited Budget in light of demonetization and the progress towards GST implementation. It is the Budget awaited with high curiosity and hopes not only by individual tax payers, senior citizens and corporates but also foreign investors and new generation entrepreneurs.
With the advent of demonetization, and government’s intentions of cashless economy, there are expectations that the finance minister will announce various incentives for encouraging card transactions and digital platform. Also, it is widely expected that an implementation schedule of GST, India’s most ambitious reforms will be rolled out.
Let's have a look at the wish lists of different tax-payers:
Individual Tax Payers -
- With the efforts of the Government to bring more savings and investments into the financial system, it is expected that tax break offered u/s 80C to be increased from Rs.150,000 to Rs.250,000 and increasing limit of Section 80D
- Young working Indians are expecting an increase in basic exemption limit from Rs.250,000 to Rs.350,000 and exempting LTA on yearly basis instead of twice in a 4 year block.
- Reintroduction of Infra bonds for additional deduction u/s 80CCF
- Enhancing deduction of savings bank interest u/s 80TTA and increase in limit of home loan interest.
- Working women are expecting additional benefits in basic exemption limits and an additional deduction for deposits in Sukanya Samriddhi Scheme which are at present covered u/s 80C.
- Considering the fall in interest rates on Fixed deposits, the senior citizens at at a cross point for venturing into alternate investment options for maintaining their lifestyle. Thus it is expected that basic exemption limit be raised for senior citizens to Rs. 5,00,000/-
With demonetization and government’s intention to eradicate black money, it is the Corporate India that is eagerly on the fence waiting for the finance minister to unfold the roadmap of economic policies. Though the corporates have not been impacted by demonetization, it is the small and medium industries that have been the most impacted.
- The entrepreneur community is expecting more relaxations for ‘Make in India’ Campaign and incentives for supporting entrepreneurship & startups by introducing tax free regimes for initial 3-5 years, easy access to funds, single window for registrations etc.
- More tax benefits are expected by corporate by lowering rates from 30% to 25% and tax exemptions for startups.
- Also, it is expected that the government would defer implementation of ICDS in view of administrative burden on businesses.
- Also, there is a hope that Explanation 2 to sub-section (1) to section 37 will be amended and CSR will be allowed as a business expense.
- The small and medium industries in the manufacturing segment are looking forward for easy access to funding and incentives for boosting the manufacturing base.
- Implementation of GST is expected to have far reaching effects in shaping the business scenario and Indian economy for the long term.
- Foreign Direct Investors (FDI), Venture Capitalists (VC), Private Equity (PE), Angel Investors look forward for a proposal for favorable environment to ease fund flow and return on investments to startups and small businesses.
- Reforms are expected in smooth availment of Foreign Tax Credit for mobile employees who are subject to tax in multiple countries.
- Clarification is much awaited for final guidelines for POEM which has been earlier issued in December 2015 and BEPS action points should be suitably incorporated in domestic legislation for effective implementation.
Budget 2017 is an array of speculation and hopes for a common man with high expectations right by way of creation of job opportunities, government support for development of agriculture and rural areas, education and other economic reforms.
Demonetization has played a major role as the country awaits for the government to unwind the road map of economic policies which can be a stepping stone for India to step in the league of global rankings for top destinations of favorable business destinations. Implementation of GST is certainly an ambitious tax reform towards this goal. This Budget will certainly bring many changes in business structure and the way of doing businesses in India. The focus shall be more to bring about an even playing field at national and international level by bring all on the formal banking system and tax net.