Tuesday, February 24, 2015

Budget 2015 -16: What to  Expect

So the rituals begin and we are in the budget week when every tax payer ( Aam Aadmi) looks at the finance minister with a lot of hope and this year the expectations are even more owing to the following factors.
  1.     This is the first full fledged budget of the  New incumbent (  NDA Government) which stormed into the corridors of power riding on the slogan Sabka sath   Sabka Vikas,  now is time for them to walk the talk and induce the  much needed confidence in the  industry as well as general public.
  2.     The budget comes on a close heels of a severe defeat in the Delhi Elections for the ruling party, the first since the general elections in may 2014 and the government needs to send a strong message through this budget  that it is still strong  on the policy front and does not lack political will to carry out the strong measures required  for the growth  and development.

While these are the factors which we believe will be the major forces determining the direction of the budget, it should also contain the measures which will give fillip to the economic growth leading inclusion of all the sections of the society.
On the front of personal finance, there are expectations on many fronts as mentioned below
1.      To  raise the basic exemption limit to Rs  300000/- , while this would be a populist measure , this will pressurize the exchequer more than other measures
2.      Another expectation could be raising the limit for 80 C investment to Rs. 200000, although it was  increased to 150000 last year only, there are little chances, it will be done again so soon
3.      Deduction from Taxable Income on interest payment of housing loan  (u/s 24) was increased to 200000 in the last year’s budget , and it would be a bit too Optimistic to expect it to increase this time also.
4.      While 80 D which provides Deduction on the premium paid for the self and Senior citizen parents  till the limit of 15000 and 20000 respectively , these limits can be expected to be revised as they have been for some time
5.      Some of the Allowances and reimbursement need to be looked into , like the tax free transport allowance is Rs 800 per month would make for taxi ride for a single day in some cases, similarly the tax free Medical Reimbursement of Rs 1250 per month seem very little looking at the cost of medicines and the cost of medicine consultancy charges, Tax Free Child Education Allowance of Rs 100 per child per month looks inadequate .
6.      Short term Capital Gain Tax on Sale of Equity Shares: While there have been voices on changing the definition of the short term for this purpose, we do not foresee this coming in the near future, while reducing the short term capital gain tax rate to 10 % would be a welcome move for the equity markets.
7.      Securities Transaction Tax:  There  has been demand to abolish this tax which is charged at a rate of 0.1% of the transaction value in the equity market. It is expected that this move might encourage retail participation in the market
In addition the finance minister will have to show intent by moving forward in the matters of GST, Direct Tax Code and other such forward looking measures which could not see the light of the day in the tenure of UPA government.
Another measure which government should set as target would be the ease of doing business in India, Entrepreneurs are an integral part of any developing and vibrant economy and the success which they achieve depends on the economic and regulatory environment in which they operate in their home country.
Targets like containing fiscal deficit to an acceptable limit needs to be achieved, while the government has the cushion of falling crude prices to ensure the same, the same should not be done at the cost of general public.

Thus our expectations are simple, friendly and simplified tax regime, more jobs for the youth , more opportunities of entrepreneurs, more amenities for the public and more growth for the country and the first Step in the direction of “ Sabka Sath Sabka Vikas”

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