The Union Budget affects everyone directly or indirectly. And everyone expects that it somehow has a positive impact on their purchasing power and the prices of the things they want to buy.
This year, considering everything that happened in 2020 due to the coronavirus pandemic, its consequences on the economy, and how it affected the common person’s income and life, everyone is keener than ever to know if the upcoming Budget can offer them some solace.
We have to wait for a little while to know exactly what the Budget has in store for us -- it will likely be presented in Parliament on February 1 -- till then we can give some thought on what exactly the common man seeks from this year’s Budget.
Last year, the Union Budget had introduced the new tax regime with lower tax rates and a simplified tax code, but it came at the cost of removing deductions and exemptions.
This year’s Budget expects that they keep the old deductions and exemptions intact and implement the new reduced tax rates rolled out as an optional new system last year.
Some other things in terms of direct taxes expected from this Budget due to the pandemic are no tax on PF withdrawal (before completing 5 years of service), increase in deduction against health check-up expense limit, some increase in standard deduction and consideration of work-from-home expenses for weighted deduction.
The indirect taxes directly affect the price of consumer goods. We expect that all the goods at 18% Goods and Services Tax should be converted to 12%.
Services like house appliances repair, Internet service, etc. should be brought under 12% GST slab. As the government keeps boasting about the record GST collections due to increase in trader’s participation, this is a fair expectation.
For the growth of the economy, positivity in the share market and to capitalise on the global need to find new manufacturing hubs, the Budget should make the provision to encourage the small businesses through new loan schemes, the lower interest rate on business loans, and subsidies for setting up new businesses.
Many people moved to their hometowns during the pandemic, and most of them are considering the possibility of staying there. This arrangement would work till the companies let them work from home; once that’s no longer the case, they would need to leave the job or come back to the big cities where they were residing earlier.
To avoid this and prevent the big cities from exploding with too many migrants, traffic and pollution, this Budget should focus on developing SEZs and other required infrastructure in tier 2 cities.
In short, businesses expect that the Budget would help them boost sinking sales and the buyers expect it to help improve their purchasing power. Everything else is just a step in the way to achieve that.
With inputs from Pepper Content