Feeling anxious about the Budget 2020? Take a breather as Government reliefs might be on their way. Check out what could happen in the upcoming Budget.
Do you feel the jittery vibe too, amid economic slowdown? Here are some reforms that might become a reality… Let’s take a look.
Income Tax, Sayonara?… Yes, this is an option too (a little far-fetched though). India’s total tax collection is a mere 17% of the GDP. Not convinced yet? It shouldn’t be long before we see something like a Bank Cash Transaction Tax and Digital Transaction Tax replace Income Tax… Talk about digitalizing India… It makes sense, doesn’t it?
Flat Tax the way to go?… Under the Flat Tax rate system, everyone pays a standard rate of tax. So, if you earn 5 lakh or 50 lakh doesn’t matter, you are taxed at the same rate. The ITD could adopt the controversial Flat Tax System. Given that only a handful of countries have really adopted the system, it doesn’t seem likely after all.
Revamp the Slab… ITD could change the slab rate this year. We could see slabs that better represent the Indian demographic. Present Slabs were last updated in 2017, and they have been untouched since. Revamping slab rates seem the most likely outcome since it will be least disruptive.
The economic snag is no secret…. Vital sectors like Agriculture, Automobile, Construction are facing an all-time low year on year growth rates. Even NBFCs who raise short-term funds and translate into long-term loans are leading to Asset Liability Mismatch i.e a credit crisis. Subsequent to the tense economic climate, attaining credit has become difficult which has lead to an eventual lower consumption nationwide.
Slice of cake served to Businesses….To induce confidence, boost the ailing economy and promote investment opportunities, FM had taken some measures. The FM had slashed the corporate tax rate from 30% to 22% in October 2019. It is the biggest rate cut in the last 28 years! The tax cut has led to bullish markets but has done little to improve job growth.
Desperate attempts to stay afloat…The Government, in order to boost the automobile sector (which took a Mike Tyson uppercut right in the jaw), has lifted the ban on the sale of vehicles to government departments. But according to the Chairman of Bajaj Group, Mr. Rahul Bajaj, the slowdown is due to excessive regulations. Nevertheless, to benefit the corporates, retail borrowers, MSMEs and small traders FM Nirmala Sitharaman had announced a release of INR 70,000 Crore through Public sector banks. It seems as if, desperate times need desperate measures.
Light at the end of the tunnel…There has been a lot of chatter around the declining GDP to a 6 year low of 4.5%. But things won’t be all gloomy for long…. That’s what DEA Secretary Atanu Chakraborty and Chief Economic Advisor KV Subramnaian said… Let’s keep our fingers crossed.
It seems that there is a ton of confusion as to how the economy will be revived… which sectors will further receive aid, will we get a tax cut, a slab change or will Taxman introduce a revolutionary system of collecting taxes? Guess we’ll have to wait and watch what FM chooses