Budget 2018: Ahead of NDA govt's final full budget, various industry representatives give their

The central government will unveil the 2018/19 Union Budget on Thursday, and investors are expecting increased investment in key areas such as agriculture, while a slew of incentives for businesses are also expected.

Handicapped by the chaotic rollout of the Goods and Services Tax (GST) last year and a shock, overnight move to take high value banknotes out of circulation in late 2016, India's economy is expected to post growth of 6.75 percent in the 2017/18 fiscal year ending in March, which would be the slowest in three years.

The government is widely expected to increase spending to ensure growth recaptures momentum, but most investors expect it to be prudent, since loosening fiscal deficit targets by too much would likely spark a sell-off in the bond market.

Representational image. Reuters

Representational image. Reuters

Below is a list of expectations across markets and corporate sectors:

Taxes:

• Reduce corporate tax rate to 25 percent from 30 percent
• Cut minimum alternative tax to 15 percent from 18.5 percent
• Enhance tax deductions and exemptions for individuals
• May tax long-term capital gains in investments

Agriculture:

• Establish funds to guarantee credit to encourage investment in agriculture
• Allocate more funds for crop insurance schemes
• Increase spending for dams and canals, micro irrigation systems
• Provide subsidies for building cold storages to avoid wastage of perishable crops
• Reduce fertiliser subsidies

Banks:

• Allow full tax deduction for provisioning of non-performing assets at lenders
• Raise the threshold for tax deduction on the interest paid on bank deposits from the current Rs 10,000
• Reduce the tenure of tax-exempted retail term deposits to a minimum of three years from the current five
• Allow tax relief for proceedings under insolvency code

Infrastructure:

• Increase investment by 10-15 percent in roads from the 2017/18 Budget
• Provide support for key road projects, including Bharatmala project, which will connect western and eastern India
• Increase investments in railways by 10 percent from the 2017/18 Budget

Technology:

• Provide greater incentives for digital transactions
• Support digital payment infrastructure
• Rationalise tariff structures, excise duties for mobile phones and tablet computers
• Lower GST rates for telecom services, from 18 percent to 12 percent

Automobiles:

• Announce policy on scrapping commercial vehicles that do not comply with emission norms if operational for over 15 years
• Lower GST rates on electric vehicles, which is currently at 12 percent

Real estate:

• Set a single-window clearance for all real estate projects
• Give infrastructure status to real estate to help bring down finance, project costs, and to make homes more affordable
• Reduce GST rates for projects under construction, from the current 12 percent
• Spend more on affordable housing
• Reduce GST rate for home purchases to 12 percent; stamp duty could also be cut

Oil and gas:

• Reduce cess duty to 8 to 10 percent from the existing 20 percent for oil and gas exploration and production
• Set more beneficial GST rates for natural gas
• Reduce or exempt city gas distribution companies from excise duty
• Exempt LNG imports from paying basic customs duty
• Provide subsidy aid to downstream companies selling LPG, kerosene below market prices

Metals and mining:

• Decrease in basic customs duty on coking coal across grades
• Decrease in export duty on iron ore above certain grade levels
• Hike basic customs duty on aluminium scrap to protect domestic industry
• Accelerate minerals exploration

Gold:

• Cut import tax on gold to 2-4 percent from 10 percent to prevent smuggling.


Updated Date: Feb 01, 2018 11:10 AM

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