Budget 2018: Every year when the Union Budget was presented in the Parliament by the Finance Minister, the people of the country glued their eyes to television to find out what got cheaper and what got dearer. The Budget 2018, the first GST-era Budget, is going to take the wind out of the entire process. The Union Budget has two parts — Part A contains allocations to different sectors and schemes, while Part B contains tax proposals, both direct and indirect.
The tweaks and sops announced under different indirect tax heads were time-sensitive and kept a secret until the presentation of the Budget. The changes were effective immediately, and companies, on the basis of these changes, used to decide prices of different goods and services.
Since the implementation of the Goods and Service Tax (GST), more than 12 different taxes including VAT, Excise Duty got subsumed, hence, leaving no room for the Budget manoeuvre under different indirect tax heads. Any decision on indirect tax on goods and services is now taken by the GST Council.
However, the direct tax is still under the Union Budget and, in that area, Arun Jaitley may choose to bring some changes. Bringing down the corporate tax rate from 30% to 25% is a long due demand, and may get a mention in the upcoming Budget.
Last year, in the Budget 2017, expecting the implementation of the GST from July, Arun Jaitley did not propose any significant changes in the indirect taxes. The government had imposed a levy of Special Additional Duty of 2% on import of populated circuit boards that used in the manufacture of mobile phones, leading to a slight increase in the price of phones. Similarly, Excise duty on unmanufactured tobacco was almost doubled to 8.3% from 4.2%, making cigarettes, bidis and tobacco products costlier. The implementation of the GST has subsumed this entire process of the Union Budget.
Though what is expected from the Budget 2018 is incentives for rural population and farmers, infrastructure investment push and measures for job creation. The Budget 2018 is the last full Budget of the present government and also the last one before eight state elections and the 2019 General Election. Experts expect this Budget to be a populist one. Arun Jaitley is likely to present the Budget on February 1.