All Eyes on Nirmala Sitharaman To Deliver Budget 2020, What’s Expected?
Analysts are calling Budget 2020 India’s hardest budget. And at the centre of it all is one woman who will need to tread this difficult rope. On one hand is the need to rev up the economy, while on the other, projections after projections are articulating a slowdown. India may have to settle for a 5 percent growth rate according to latest data out. The Federation of Indian Industry has projected the country’s annual GDP growth for 2019-20 at five percent, in line with the projections made by the National Statistical Organisation (NSO). The International Monetary Fund too has lowered growth expectations. In this backdrop, here’s what is on the expectations list:
- A change in tax slabs: People hope taxes will be lower and people will therefore have to pay less of their salary to the government and keep more in hand to spend on themselves. Radhika Rao, Economist with DBS Group said that India could consider raising the minimum taxable income or introduce a different tax rate for higher-income earners.
Given the economic circumstances, it’s not easy for Sitharaman to dole out much but if incentives aren’t offered, a slowing economy will not kickstart at all.
The current tax brackets apply to the following annual income for individuals under 60.
Up to 250,000 rupees — no tax
Between 250,000 to 500,000 rupees — 5 percent tax
Between 500,000 to 1,000,000 rupees — 20 percent tax
Over 10,00,000 rupees — 30 percent tax
- Housing: Will the government introduce further housing benefits? Last budget, the government through this union budget has allowed an additional tax deduction of Rs 150,000 on interest paid on housing loans borrowed up to 31.3.2020 for self-occupied house owners. That takes the total deduction to upto Rs 3.5 lakhs.
- Skills: Will the upcoming budget talk of incentivising skills and learning? Social sector measures including a sustained push toward providing electricity to households in villages, improving the availability and quality of health care and education, as well as efforts to develop skills are also expected, she added.
- Long terms capital gains: A few budgets ago the government introduced a tax on long term capital gains for those people who invest and earn via the stock market. Under that, the government imposed a 10 percent tax on any profits exceeding Rs. 100,000 from shares held for more than a year. This, experts say, should be removed so that equity investments get a boost.
- Self Help Groups: For women last year in 2019, the budget pushed for empowering them financially, proposing an overdraft facility of Rs 5,000 for all verified women self-help groups (SHG) members with a Jan Dhan bank account. The budget had also aimed to expand SHG to all districts and said one woman in every SHG will get loan of up to Rs 1 lakh under Mudra Yojana.
- GST issues: Many women entrepreneurs like the rest of the business community wants pain points on Goods and Services Tax cleared.
Will Nirmala Sitharaman do another “Nari tu Narayani“? Entrepreneurs and young women alike are hoping for specific announcements to boost tourism and hospitality, skill incentives in both urban and rural areas, more for the support to training and employment programs. Given the economic circumstances, it’s not easy for Sitharaman to dole out much but if incentives aren’t offered, a slowing economy will not kickstart at all.