Expectation from Union Budget 2020

The Finance minister Nirmala Sitharaman will present her second budget on Saturday on Feb 01, 2020. The budget is very crucial for the Indian economy as it’s taking a downturn and GDP numbers are also falling. So the union budget 2020 presents an opportunity for the Indian economy to come on track again. The more focus will be on the tax rate for individuals and corporates including indirect taxes like custom duties and other duties. Below are some key changes that are expected to be seen in the new budget speech of the finance minister.

• Boosting the Economy of India: Personal income tax rates are being considered for relaxation. No income tax is expected for salary up to 10 lakh per annum. Also, the surcharge and cess are being considered for removal. The finance ministry is also considering the GST tax to reduce. There would be just two GST tax lower levels.

• Personal Tax Cut: The common man can expect the government to announce an increase in income tax (basic) exemption limit from the existing Rs 2.5 lakh to Rs 5 lakh. There is an expectation that the government will lower the highest tax slab rate from the current 30% to 25%. Deduction under Section 80C also expected to increase to Rs 3 lakh per annum from Rs 1.5 lakh per annum.

• Increased Tax Benefits On Housing Schemes: Housing is such a critical need that the government has been focusing on providing certain tax benefits In the last budget, FM Sitharaman earlier gave a Rs 1.5 lakh tax exemption to houses bought below Rs 45 lakh. It is expected that this exemption limit could rise to Rs 75 lakh this time.

• Low GST On Consumer Durables and FMCG Products: There is a big expectation that GST rates on some of the items would be rationalized and brought down to aid consumption.

• Low-interest rates: The government can ensure that the interest rates are brought down which will be a major boost to consumption in the economy. Interest rates are still high particularly those of private sector banks and the entire repo rate reduction by the Reserve Bank of India (RBI) has still not been passed by the banks to the retail as well as to the corporates.

• Capital Infusion for Public Sector General Insurance Companies: The public sector general insurance companies may get additional Rs 10,000-12,000 crore capitals to infuse to meet the prescribed solvency margin. The three public sector insurance companies United India insurance, National insurance, and Oriental insurance were given Rs 2500 crore last month.

• Benefit on LTA for Foreign Travel: Under this scheme, an employee is eligible for Leave and Travel Allowance from the employer for going on a vacation anywhere in India. There are expectations that the government will provide the LTA benefit for both Indian and foreign destinations.

• Enhanced Credit Flow to NBFCs: This upcoming budget could provide a strong opportunity to build a cashless economy and create a cycle of credit that lubricates the industry and leads to higher growth and financial wellbeing to MSMEs and NBFCs for enhancement of consumer demands.

• Government Looks Forward to Cut Import Duty on Gold: A significant reduction in import duty of gold is expected in the Union budget 2020. Presently, the import duty on gold is 12.5% and GST is charged 3%. Indian jewelers have high expectations from the finance minister to cut the import duty in the current year budget.