Budget 2017: Lower tax rates, definitive GST plan and other expectations post demonetisation

Considering this rough run-up, there are high expectations of the government announcing various “feel-good” factors in the Budget 2017.

Written by Manoj N Kumar | Published:January 28, 2017 1:20 pm
Union Budget, Union Budget 2017, 2017 Union Budget, lower tax rates, demonetisation, affordable housing measures, GST implementation, cashless transactions, no tax on senior citizen pension income, India news, Indian Express Finance Minister Arun Jaitley before last year’s Budget. (Ravi Kanojia/Express File photo)

The Union Budget 2017 is unique and historic in many ways starting with advancement in the date of presentation of the Budget to February 1 consolidation of the Railway Budget to the backdrop of demonetisation effects and proposed GST implementation.

In the run up to this budget, the Indian economy that just seemed to have stabilised on a growth trajectory registering GDP growth of around 7.6 per cent was subjected to a sudden slow down with the bewildering demonetisation announcement. The decision though commendable from the combating black money perspective, has caused significant liquidity issues and is expected to have lasting impact on a number of sectors including Real Estate, automobiles, FMCG.

While the government has been projecting its strong commitment to restore the economy on its growth track, its political rivals are vehemently highlighting the long-lasting ill effects of demonetisation. The political turmoil has also led to slow down in the implementation of GST, the largest reform in the indirect tax space.

Considering this rough run up, there are high expectations of the government announcing various “feel-good” factors in the Budget 2017. Following are some of the key expectations from Budget 2017:

Revamped structure and lower tax rates

The general public at large is hoping for a change in the Income Tax slabs. As a result of the anticipated decline in customer spending, this year’s budget is expected to increase the current taxable income tax slabs. Some media outlets have reported that the Government is planning to revise the current minimum annual taxable income slab of 2.5 lakh to Rs. 4 lakhs per annum

Further, there is an anticipation to lower the tax rates, based on indications from the Finance Minister, Shri Arun Jaitley that focus should be on lower tax rates. The argument is that lower tax rates such as those prevalent in many economies actually have the potential to bring in greater revenues as they have a much broader tax base.

The Corporates also are expecting a reduction in the headline tax rate in line with the Budget 2015’s commitment of the government to reach a headline rate of 25 per cent in 4 years.

Definitive GST implementation plan

GST has been a major talking point and a bone of contention between the central and state governments over the last few months. With the air on sharing of control between the Centre and States being cleared, the government is expected to get the bill legislated and outline some definitive steps for implementation in June – September 2017.

Incentives for to discourage cash transactions and promote cashless transactions

The government has already announced incentives for those making payments through digital mediums like debit/credit cards, mobile wallets etc. and with a vision to move towards a cashless economy, the government may announce further measures to encourage digital payments. On the other hand, the government is also expected to announce measures to discourage cash transactions based on the recommendations of the committee of Chief Ministers such as abolish cash transactions above Rs 50,000, tax cash transactions above a certain threshold, apply a maximum limit for withdrawal of cash etc.

Affordable Housing Measures

Last year’s budget included some key announcements that promoted low cost housing and offered cheaper home loans to individuals for such housing. While the government has announced 4 per cent interest rate subvention for home loans up to Rs 9 lakh and 3 per cent interest relief for loans up to Rs 12 lakh, there might be further relaxations in the tax holiday provisions for developers involved in the construction of such affordable housing.

Exempt long term capital gains on immovable property and tax listed securities:

There is speculation that the Government may on one hand exempt long term capital gains tax on immovable property given the limited contribution of such income to the tax kitty as per past reports, while on the other hand the government may introduce new rules for taxing capital gains from listed securities. Currently, there is no tax implication for gains made from listed securities that have been held for a year. This minimum holding period may be raised to 2 or 3 years. There is also no limit on the tax-free gains, which might be capped at a high amount. Currently, there is a 15 per cent tax on listed securities sold within a year; this may be increased to 20 per cent.

No Tax on Sr Citizen Pension Income

Another populist announcement, which many are demanding is the pension income for senior citizens be made completely tax free. This will not only help the elderly but will also reduce operational work for income tax authorities.

(Manoj N Kumar is Partner, Direct Tax, BMR and Associates LLP. Views expressed by him are personal.)

For all the latest Blogs News, download Indian Express App

  1. D
    Doris Melody
    Aug 12, 2017 at 1:46 pm
    Hello, Are you in need of loan? you can get your problems solved when running it. Am Britany melody. From USA, last week on Monday i was seeking loans to pay my bills, so I've gotten the hand of different scams and I was scams by different lender, If it was not for the lady, Sadaih who is my good friend introduce me to Sr.Davis (CEO) of the Mr.Davis morgan loan company, and he helps me with a loan of $ 500,000 without stress. So my good people of USA, you can contact him via e-mail: Davismorganloancompany or whatsapp them on this number 2347082449821 And don"t forget, I introduce you to your enterprise
    1. C
      Chris Reagan
      Aug 7, 2017 at 10:42 am
      Welcome to Africa Zenith Foundation(A Charity Cooperative Organization Service for all your Financial Needs).We are a well recognizes loan lender in Nigeria African Center who offers loan at a very low interest rate of 3 , we offer: Personal loans Debt Consolidation Loan Venture Capital Business Loan Educational Loan Home Loan And Loan for any reason and urgent needs!. with a maximum duration of 20 years. Have you been turned down by your bank? Do you have bad credit? Do you have unpaid bills? Are you in debt? Do you need to set up a business? Worry no more as we are here to offer you a no interest rate. Contact us: africazenithfoundation
      1. w
        Jul 31, 2017 at 4:24 am
        I was intrigue when Mr Derrick sent me his Blank ATM Card. 2years ago i was needing some money to finance my business and pay my bills at my home and other things. i have gone through many companies trying to get help even bank but no way out. until i saw a blog comment of Juan Nate and when i saw his reviews i was Glad. so i contacted Dr Derrick on his email and after i did i told him about my present situation and that in a lot of debts and he wrote to me assuring me that once i have obtained his Blank ATM Card things will change for the better. after 4days i received and i began to use. following instructions given to withdraw with the ATM Blank Card. i was surprise with how much i withdraw within 6days. dear friends you too can be rich and be able to elevate your business by contact: Derricksecureblankatmhackers . and change your situation and life around for the better.
        1. K
          Kim Campbell
          Jul 31, 2017 at 3:22 am
          I’m KIM CAMPBELL from New Jersey United States. I lost my job few months back after my divorce with my Husband. I tried everything positive to make sure i take good care of my kids but all failed, and i was in debts which makes everything worse. I was kicked out of my home and i had to live with my neighbor after pleading with her to allow me stay with her for some days while i figure out how to get a home which she agreed, but no one was willing to help anymore. I bumped into this page from google and I was excited about this, then I contacted the hacker, i was scared at first but after i was shown proof of persons who had their lives changed i was let with no choice but to take a bold step,and till today that is the best one i ever took, and today i am very happy with my life, though they do not know i am doing this i really want them to have the best in life, contact them on their email:dmhatmhacker or dmhatmhacker hotmail #money
          1. D
            Jul 8, 2017 at 11:39 am
            Deal4bank provide best home loans with lowest home loan interest rate in pune
            1. E
              Engr Mark
              Jul 4, 2017 at 3:08 am
              I got my already programmed and blanked ATM card to withdraw the maximum of $50,000 daily for a maximum period of 20 days. I am so happy about this because i got mine last week and I have used it to get $100,000. William Scot Hackers is giving out the card just to help the poor and needy though it is illegal but it is something nice and he is not like other scam pretending to have the blank ATM cards. And no one gets caught when using the card. get yours from William Scot Hackers today! Just send an email to williamscothackers
              1. M
                MRS JILL PARKS
                Jun 27, 2017 at 4:43 pm
                Good Day, Are you in any kind of financial difficulties? Your help comes now. Are you having sleepless night worrying how to get a Loan?Don't allow your dreams to die, or are you looking for whom to trust or have you been scammed by INTERNET fraud stars, or you have been turned down by other financial company contact Mrs Mi a Bethany Loan Firm today for easy and reliable Loan contact us via email: mi abettanymotage Contact Person: Mrs Mi a Bethany Email: mi abettanymotage Phone 13257047206
                1. M
                  MRS JILL PARKS
                  Jun 27, 2017 at 4:41 pm
                  Hello everyone, All thanks to Mrs Mi a Bethany who i got a loan from, She have save my life and i promised to tell it to everyone, Do you need a loan and need a legit person feel free to contact Mrs Mi a Bethany on her email: mi abettanymotage Contact Person: Mrs Mi a Bethany Email: mi abettanymotage
                  1. Load More Comments