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Major Tax Sops Unlikely In Union Budget 2019-20

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While many analysts are optimistic that there would be major tax sops for individuals in Union Budget 2019-20, it is unlikely to happen. One of the reasons for the same is that there are fiscal deficit worries and the government would have to continue its pro-farmer and pro-poor benefits.

Also, with the economy considerably slowing down, there are worries that direct tax collections will not be as buoyant. Also, in the past the divestment target of the government has not been met.

 

Against this backdrop, it is highly possible that there maybe no major recommendations on the individual tax front. At best Sec 80C may be enhanced to Rs 2 lakhs, in place of the current limit of Rs 1.5 lakhs.

However, this too is a decent amount, especially for those who are in the highest tax bracket.

Sticking to fiscal deficit
  

Sticking to fiscal deficit

The fiscal deficit number would be eagerly watched by economists and analysts alike. The government in the past has stuck to this number and we are unlikely to see the trend change. In all probability, we will see the number at 3.4 per cent for FY 2019-20.

Stock market enthusiasts would also eagerly watch whether there would be a scrapping of the Long Term Capital Gains in the Union Budget. If we do not see the same, there is a possibility that the stock market might fall. On the other hand, if there is a Long Term Capital Gains limit increased to Rs 2 lakhs, we might see the markets recovering.

What may come through from the government's end, is some increase in the 80C limit, which could in turn boost savings and investment.

Thrust on growth
  
 

Thrust on growth

At the moment, there is also a need to push economic growth, through increased allocation to key sectors, including the infrastructure sector. This would also generate new jobs, which has been crucial for the country.

There are also reports that the government would provide some sops for the housing sector. That too looks unlikely as in the past it has already increased exemption on interest income.

Strong mandate means a chance for bold steps
  

Strong mandate means a chance for bold steps

The government has got a very strong mandate and hence there is a possibility, that we could see some bold reforms come through. It is also hoped that Nirmala Sitharaman addresses the liquidity concerns of the NBFC and the housing finance sector.

It is also important to remember that there may not have been adequate time for the government to keep in mind requirement of all stakeholders. Hence, at least in this Budget it would be good to tone down expectations.

Strong mandate means a chance for bold steps
  

Strong mandate means a chance for bold steps

The government has got a very strong mandate and hence there is a possibility, that we could see some bold reforms come through. It is also hoped that Nirmala Sitharaman addresses the liquidity concerns of the NBFC and the housing finance sector.

It is also important to remember that there may not have been adequate time for the government to keep in mind requirement of all stakeholders. Hence, at least in this Budget it would be good to tone down expectations.

Read more about: union budget 2019 20
Story first published: Wednesday, June 26, 2019, 11:38 [IST]
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