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Less than 24 hours to go for Budget 2018, Here’s what we expect

31 Jan 2018 Nikita Bhoota

Untitled Document

Will the Government increase the limits under section 80C of the income tax act? Will it revise the tax slab for the FY18-19? Will it change the long term capital gain tax norms?  All these questions and many more will get their answers with the announcement of the NDA Government’s Union Budget 2018-19 tomorrow. This will be important budget for the Government as it is the first Budget after the implementation of GST as well as the last full budget before the Lok Sabha election due in 2019.

The following are some of the key expectations from Budget 2018-19

1. Taxation relief for individuals as well as corporates

It is expected that this budget will provide some tax relief to common man and the business community. The Government is likely to increase the tax exemption limit from 2.5 lakhs p.a to 3 lakhs p.a. Additionally, it may also reduce the corporate tax (FM had assured while presenting his Union Budget 2015-16) from 30% to 25% over the period of 4 years.

2. Increase the limit under section 80C

The budget may increase the limit under section 80C to Rs2 lakh vs. Rs 1.5lakh currently. Further, under section 80CCD(1B), a person can get additional deduction on investments in NPS account up to Rs50,000 per financial year. Many investors do not invest in NPS since it does not have Exempt- Exempt- Exempt (EEE) status like EPF and PPF. Thus, the government may give investors an additional incentive of Rs50,000 to invest in NPS.

3. Introduction of long term capital gain tax (LTCG) or change in holding period

The Government may abolish Securities Transaction Tax (STT), which is levied on trade on the stock exchanges. On the contrary, it is expected to introduce LTCG on shares that are held for more than 12 months or will change the holding period for LTCG tax from one year to two years in the forthcoming budget.

4. Increase in disinvestment target

The Government is all set to meet its disinvestment target of Rs72,500cr set in the previous Union Budget through strategic sales, listing of insurance companies and disinvestment in public sector units (eg. HPCL stake sale and other divestments) for the first time. Disinvestment is likely to increase to 1 lakh cr in the upcoming budget.

5. Push to affordable housing and infrastructure spending

It is expected that this budget will continue to focus on infrastructure development. It may increase investment in road projects. Besides, it will continue to offer home loans at cheaper rates to individuals for promoting low cost housing announced in the last budget. It might also increase the allocation towards railways project to improve rail connectivity in the country.

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Less than 24 hours to go for Budget 2018, Here’s what we expect

31 Jan 2018 Nikita Bhoota

Untitled Document

Will the Government increase the limits under section 80C of the income tax act? Will it revise the tax slab for the FY18-19? Will it change the long term capital gain tax norms?  All these questions and many more will get their answers with the announcement of the NDA Government’s Union Budget 2018-19 tomorrow. This will be important budget for the Government as it is the first Budget after the implementation of GST as well as the last full budget before the Lok Sabha election due in 2019.

The following are some of the key expectations from Budget 2018-19

1. Taxation relief for individuals as well as corporates

It is expected that this budget will provide some tax relief to common man and the business community. The Government is likely to increase the tax exemption limit from 2.5 lakhs p.a to 3 lakhs p.a. Additionally, it may also reduce the corporate tax (FM had assured while presenting his Union Budget 2015-16) from 30% to 25% over the period of 4 years.

2. Increase the limit under section 80C

The budget may increase the limit under section 80C to Rs2 lakh vs. Rs 1.5lakh currently. Further, under section 80CCD(1B), a person can get additional deduction on investments in NPS account up to Rs50,000 per financial year. Many investors do not invest in NPS since it does not have Exempt- Exempt- Exempt (EEE) status like EPF and PPF. Thus, the government may give investors an additional incentive of Rs50,000 to invest in NPS.

3. Introduction of long term capital gain tax (LTCG) or change in holding period

The Government may abolish Securities Transaction Tax (STT), which is levied on trade on the stock exchanges. On the contrary, it is expected to introduce LTCG on shares that are held for more than 12 months or will change the holding period for LTCG tax from one year to two years in the forthcoming budget.

4. Increase in disinvestment target

The Government is all set to meet its disinvestment target of Rs72,500cr set in the previous Union Budget through strategic sales, listing of insurance companies and disinvestment in public sector units (eg. HPCL stake sale and other divestments) for the first time. Disinvestment is likely to increase to 1 lakh cr in the upcoming budget.

5. Push to affordable housing and infrastructure spending

It is expected that this budget will continue to focus on infrastructure development. It may increase investment in road projects. Besides, it will continue to offer home loans at cheaper rates to individuals for promoting low cost housing announced in the last budget. It might also increase the allocation towards railways project to improve rail connectivity in the country.