Budget 2019: What India Inc expects

Chennai: The BJP led NDA government will present its interim budget for 2019 in the Parliament on 1 February. It is called an ‘interim’ budget as it is an election year and the budget will hold only till the current government is in power, which is for two months of FY 2019-20.
So, the government cannot announce major tax measures or expenditure schemes in the interim budget. Keeping this in mind, News Today has compiled a wish list from industry participants and certain other expectations.
Agriculture

A key focus area for the government in 2019 will be the agrarian crisis that has almost engulfed the entire farmer community.

Though Finance Minister, Arun Jaitley has always maintained that farm loan waivers will not solve the long-standing issues of the farm sector, with the elections looming, it is expected that loan and interest waivers may seep through into this year’s budget to please farmers.

Apart from waivers, farmer relief packages might be released too, including support for the purchase of fertilizers, seeds, and machinery as well as the expansion of farm credit target.

Real Estate
The real estate sector in India is one of the most important and critical sectors as it contributes 6-7 per cent of the GDP and generates a substantial amount of employment in the country.  However, demonetisation and GST caused serious disruptions in the sector initially. Here are the expectations of the sector.
  • Reduction of GST slab for cement from 28 per cent to 18 per cent.
  • Reduction of GST slab on under construction housing projects from 12 per cent to 5 per cent.
  • Placing affordable housing projects in the priority list of lending institutions.
  • Raise in deduction limit of interest paid on residential house property (capped at Rs 2 lakh under Section 24).
  • Relaxation in income tax slab to enhance purchasing power of home buyers or aspirants.
PSU insurance

The upcoming Budget may have provision for Rs 4,000-crore capital infusion for public sector general insurance companies to shore up their capital.

According to sources, the Department of Financial Services sought Rs 4,000 crore in the Budget for fund infusion in three insurance companies – National Insurance Company, Oriental Insurance Company and United India Insurance Company.

This capital is required to strengthen their financial health. Initial estimates suggest that the combined entity formed by merging the three insurers will be the largest non-life insurance company in India, valued at Rs 1.2-1.5 lakh crore.

Startups

In the upcoming interim budget, Interim Finance Minister, Piyush Goyal is likely to announce sops to boost the government’s flagship programmes and schemes such as Digital India, Make in India, Startup India, and MUDRA.

One of the biggest stakeholder, startups, expects the government to bring in an immediate change in the angel tax structure since it has hampered new investments. Many startups point out that the government should come up with a considerable provision of value-added services like marketing fees, advertising and other such promotions that need to be considered under a progressively lower GST tax structure.
Automobile

The automobile sector has a series of demands from the government, some of which might be met in the interim budget session.

The foremost is the automotive scrappage policy, which aims to phase out vehicles older than 15 years from Indian roads has been discussed for quite some time. The government may provide a one-time tax rebate or benefits for those scrapping their old vehicles.

The scrappage policy is beneficial to the industry, as it will create a significant replacement demand. According to estimates, the policy could create incremental demand for 6-7 lakh Medium and Heavy Commercial Vehicles (M&HCVs) over the next 2-3 years.
The second important expectation from the auto sector is GST cut on two-wheelers to boost demand and, the rationalization of tax rates for cars. GST rate cut on two-wheelers from 28 per cent to 18 per cent is a long time demand. Two wheelers are mass mobility item used by the common man, and hence, its tax rate slab should not be same as that of luxury and sin goods, claim the auto makers
NRIs

Non-resident Indians (NRIs) are awaiting the interim budget for the financial year 2019-20 and hope some of their concerns will be addressed in the finance document expected to be presented in parliament on Friday.

Issues pertaining to gold, real estate and fixed income instruments are of primary concern and any reform in these areas will be considered as NRI-friendly.

Some of the expectations from NRIs include:

  • Increase in minimum income threshold to Rs 4,00,000 to Rs 5,00,000.
  • Carry forward benefits of interest with respect to residential property (presently capped at Rs 2,00,000).
  • Withdraw long-term capital gains on listed securities.
  • Increase in tax deductions to Rs 2,50,000 from Rs 1,50,000 under section 80C and its subsections.
  • Reduction of high customs duty on gold.

A Harsha Vardhan