Budget 2020 India: The government is already setting the tone for the budget with the focal areas being encouraging private investment, welfare schemes, economic growth, and tax incentives.
By Ajith Mohan Karimpana
Union Budget 2020 India: With the Union Budget 2020 set to be announced on 1 February 2020, all eyes are on the policies and how conducive they will be to various sectors. The government is already setting the tone for the budget with the focal areas being encouraging private investment, welfare schemes, economic growth, and tax incentives. We feel that this should be a budget wherein strategies are put in place as per the needs and lifestyle aspirations of the millennials; since they form a significant chunk of the population with high disposable incomes. Given the rise of the sharing economy and the ‘pay-as-you-use’ model, there is a need to focus on solutions and policies that boost this sector.
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Budget 2020: Better days for startups
There have been several steps taken in the past towards supporting start-ups including the national programme on AI. However, we are yet to see substantial policy developments, and this is something we expect the budget to address. To keep the start-up spirit alive in India, we hope to see the ‘Digital India’ initiative go a step further in terms of making it easier for start-ups to gain access to debt, especially from the public sector banks.
Another encouraging move would be around simplification of compliance procedures as this would make things easier for upcoming ventures. There is also a need to enable ease of doing business, the first step towards which would be to make GST compliance simpler.
The focus on Digital India should also be increased with a thrust on technology such as AI, ML, and Blockchain.
Budget 2020: Tax relief
The corporate tax rate was slashed about three months ago in a bid to boost the sector.
However, although this is expected to improve company bottom-lines, it has not been able to make much of an impact. This cut could actually help in increasing profits for a company provided the demand side is addressed by increasing the disposable income of customers as well. For this to happen, the benefit of tax cuts is also extended to individual taxpayers.
Budget 2020: Sustainable businesses
There is also a need to introduce tax sops for businesses that are sustainable and environmentally sound. It is also important to encourage those companies that manufacture or source their raw materials indigenously.
Capital gains must be made applicable at the time of sale of equity and brought at par with the capital gains tax rates of listed companies.
Another area which the budget should address is changing import duties on select items to promote domestic manufacturing which will be highly encouraging for companies.
The Indian economy, as most of us know, is already in the midst of a sluggish slow down. Given this, we hope the budget will have proactive policies that address this and priority areas such as boosting demand, staying fiscally fit, and easing compliance, all of which are urgent need of the hour in the country.