Ever tried following the Budget as it unfolds? For most, it is an arduous task to make much sense of it. Let us throw some light on the kind of issues that the aam aadmi can focus on.
For the aam aadmi nothing has mattered more than his household budget; duty hikes and price hikes. This time round, anticipation is rife that there could be a round of fuel price hike. The government is also fond of hiking levies on cigarettes and alcohol and there are also many other items that could come into the duty hike radar, especially the luxury items.
Although fuel price impact (if any) may be directly derived from the excerpt of the Budget speech, to gauge the impact of duty/tax hike one may have to dig a little deeper by reading the small print.
Personal taxes
The common man remains eternally hopeful there could be some relief in the form of tax simplification. The income-tax regime has been simplified significantly over the past decade. This time, we are hopeful that the direct tax code regime would be tabled. It?s already missed numerous deadlines, the last one being the winter session.
With the advent of DTC, there would be few positives such as enhancement of deductions and encouragement of long-term investments. The dampeners would be equity-linked savings scheme not being a part of the deductions. Although DTC could be tabled this Budget, it is highly unlikely that the finance minister would make extra efforts to make it a populist Budget. He would probably save the populism for next year, the last Budget before polls.
Indirect taxes
On every single penny that you spend, there is a certain percentage which is levied as tax. There are numerous types of taxes that are applicable, based on the nature of product/service. This Budget, in a sense, could even out this with the advent of GST. Many states are not in favour of GST. It is to be seen if it is implemented.
Economic Survey
Just before the Budget, there is a report brought out on the health of the economy, the Economic Survey. Although gross domestic product (GDP), fiscal deficit, etc, may not affect the aam aadmi directly, these are significant components that can determine the disposable income, job opportunities, and even costs of household items.
This time, fiscal deficit is what all are watching out for. Clearly, the government has not been able to contain it. This in itself can impact the common man in multiple ways ? lesser opportunities, lower disposable income, distortion of demand ? supply dynamics across sectors, upward skew in prices of essential commodities, margin pressures for businesses, etc.
Tips for household budget
Although it would be tough to read the Budget document, one should try and stay abreast of provisions that can impact him. Don’t overanalyse the Budget and don?t listen to too many experts! Budget ?highlights? should suffice to give one the ?important? information. Look for specific pointers in the Budget ? duty/tax hikes and fuel price hike are aspects which have the potential to throw your household budget awry. Reduction of taxes would mean a higher take home, and this time it could be in the form of implementation of DTC.
Indirect taxes affect your life as much as direct taxes. Any change in the regime could cause fluctuation in the net price of a product/service (watch out for the GST). Lastly, look at the Economic Survey which will give a good feel of the economy of the country.
The writer is CEO and founder of Right Horizons