At a pre-budget with Arun Jaitley, bankers urged the Finance Minister to hike the TDS (Tax Deducted at Source) exemption limit on fixed deposits for senior citizens to Rs 50,000 from the current Rs 10,000.
Budget 2017: At a pre-budget with Arun Jaitley, bankers urged the Finance Minister to hike the TDS (Tax Deducted at Source) exemption limit on fixed deposits for senior citizens to Rs 50,000 from the current Rs 10,000. According to a CNBC-TV 18 report, the bankers also told FM Jaitley that they expect the Budget to be “unconventional” and “bold”. “There is need to balance the fiscal policy with spending,” bankers told the FM, the channel reported.
The bankers also reportedly asked the government to give tax incentives to retailers and consumers for digital payments. This demand comes after the Narendra Modi government’s massive demonetisation drive that is aimed at both eliminating black money and pushing India to towards a “less-cash” society. In that regard, bankers also told the government that it must assure that withdrawal limits will be removed after December 30. They asked the government to extend the 60-day relaxation to classify an asset as NPA under demonetisation. The NBC sector suggested extending the window till March-end.
The Modi government has preponed the Budget this year and while the official date is yet to be announced the indications are that the financial statement would be presented on February 1, 2017. This year’s budget is special on multiple accounts. For one, this is the first time that the Railway Budget will form part of the main Budget.
But more importantly, Budget 2017 comes within months of the demonetisation of old Rs 500 and Rs 1000 notes. There is widespread expectation that the government will announce a slew of measures to incentivise the use of digital payments methods. These measures may include tax incentives as well. An India Today report, citing sources, said that the government may look at increasing the base slab for income tax exemption from the current Rs 2.5 lakh to Rs 4 lakh.
Also, Jaitley has indicated that the benefits accruing to the government as a result of demonetisation will give room to bring down the common man’s tax burden. Jaitley said this in expectation of a rise in digital transactions. “Once they (digital transactions) are substantially digital, they get caught in tax net. Therefore, the future taxation level would be much higher than what is currently being collected. This would also enable the government at some stage to make taxes more reasonable, which will apply to both direct and indirect taxes,” he said.