Budget 2019 Income Tax expectations: On the Income Tax or personal tax front, only five out of 15 experts surveyed expect the government to make any major announcements.
Budget 2019 India Income Tax expectations: Expectations of common man are high from the Narendra Modi government ahead of the Union Budget 2019 India. Middle-class income tax payers are hoping that like Interim Budget 2019, the upcoming Union Budget 2019 will also put a smile on their faces by providing Income Tax relief. In Interim Budget 2019 on February 1, the Modi government provided rebate relief to individuals earning up to Rs 5 lakh. Apart from that, with the income tax relief individuals with income up to Rs 6.5 lakh would not have to pay any tax provided they have investments in provident funds and prescribe equities.
However, given the present state of Indian economy, it would be very difficult for the government to take such populist move, feel economists and experts surveyed by Financial Express Online. There is little fiscal room for the Modi government to take big decisions on the income tax slab changes since that would mean a hit to revenue collections.
On the Income Tax or personal tax front, only five out of 15 experts surveyed expect the government to make any major announcements. While six economic experts have voiced that Modi government won’t make many big changes in personal tax in the Budget 2019, four analysts found it difficult to predict the course that Modi government will take on the issue.
DK Srivastava, Chief Policy Advisor, EY is of the view that some additional concessions are expected for improving savings and investment. “Some relief to give impetus to housing is also likely. However, no major changes in the tax slab are expected,” he told Financial Express Online.
Anita Gandhi, Whole Time Director, Arihant Capital Markets Ltd believes income tax relief will help spur economic growth. “In the recent past lot of investors suffered losses in the debt products (which are supposed to be sate investment) due to the debacle in ILFS, NCD defaults of DHFL and its implications on Equity markets. Many stocks in Eequities led to massive losses to investors due to lapses by auditors,” she told Financial Express Online. “Any announcement on personal taxation front will give relief to the investors and also it will help in routing the benefits into more savings and spending to spur growth,” she added.
Madan Sabnavis, Chief Economist, CARE Ratings, while acknowleding that the government should provide income tax relief, added that the prospect of revenue loss will prevent it. Vikas Vasal, National Leader – Tax, Grant Thornton in India ruled out any possibility of announcements on Income Tax stating some relief has already been provided earlier in the Interim Budget 2019.
Rupa Rege, Nitsure, Group Chief Economist, L&T Finance Holdings said that some revision in tax slabs and or tax rates is likely to spur consumption. Sachchidanand Shukla, Chief Economist, Mahindra Group said there can be a small giveaway in tax exemption limit, but only notional with no major relaxation. Sanjeev Hota, Head of Research, Sharekhan said, “There are expectations from the government to increase exemptions from current Rs 2.5 lakh to Rs 3 lakh, however, the probability remains low, owing to lack of overall tax collection. Nevertheless, the government could increase deduction under Section 80C to Rs 2 lakh from Rs 1.5 lakh currently,” he told Financial Express Online.
Vivek Kumar, Senior Economist, YES BANK said, “While there is an expectation of a minor IT relief for individuals to prop up domestic demand, substantial shortfall in IT collections in FY19 could limit the room for any easing on this front.” A private lender said, “Revenue constraints again may restrict an en-mass reduction in rates. However we feel she (Nirmala Sitharaman) should reduce at least in certain slabs to ensure the savings lead to increase in consumption that will help in economic growth.”
Ranen Banerjee, Partner and Leader Public Finance and Economist, PwC said, “Given the DTC is in the works, the decisions could be deferred as this is the first year of the government and it is insulated from populist pressures.”