BUDGET-2017 EXPECTATIONS

India’s Union Budget is a unique event and it is often a highly polarizing debate with pundits from various schools of thought expressing multiple opinions.
For weeks before and after the budget speech, media discussions featuring various experts talk about expectations and effects of the Finance Minister’s speech

The Union Budget for 2017-18 will be presented in Parliament in the first quarter of 2017 on 1st Feb 2017. (Most Expected Date)

Expectations from different industries and the public have already started coming in.

Some Changes that are expected from Budget-2017 are:-

1. First of all ,after demonetisation it is expected that there could be a change in Income tax slab rates.This is on top of every citizen’s list of expectations. With the demonetisation announcement in November leading to massive inconvenience for the common man, many are expecting the government to increase the tax exemption slab from Rs 2.5 lakhs to Rs 3 lakhs. There may also be a reduction in the tax rate.

Budget 2017-18 Income Tax Slab Rate Expectations:-

Taxable Income	Tax Rate
Less than Rs. 4 lakhs	Nil
Rs. 4 lakhs to less than Rs. 8 lakhs	10% on taxable income exceeding Rs. 4 lakhs (Max. Rs. 40,000)
Rs. 8 lakhs to less than Rs. 12 lakhs	Rs. 40,000 + 20 % on taxable income over Rs. 8 lakhs (Max. Rs. 1.2 lakhs)
Rs. 12 lakhs and above	Rs. 1.2 lakhs + 25% on taxable income over Rs. 12 lakhs

   2. More Incentives for Digital Payments:

The government has already announced incentives for those making payments through digital mediums like debit/credit cards, mobile wallets etc. Service tax on payments for transactions upto Rs. 2000 through debit/credit cards have been removed, 0.75% discount has been announced for digital payments at petrol stations. With a vision to move towards a cashless economy, the government may announce further measures to encourage digital payments.

  3. Change in Service Tax Rates :-

The effective service tax rate currently stands at 15%.

It was hiked in the 2016 Union Budget from 14.5% to 0.5% with the introduction of the Krishi Kalyan Cess (0.5%). Prior to that it was hiked from 14.0% to 14.5% with the introduction of the Swachh Bharat Cess which was applicable from November 15, 2015.

In the upcoming Budget 2017, there is a possibility that Finance Minister Arun Jaitley may hike the service tax further.

This would help the Centre mop up more revenue from services and bring the effective rate closer to the 18% once the Goods and Services Tax (GST) regime is implemented

4. Allowing Refund of TDS on Property immediately:-

When a property is sold, TDS is deducted by the buyer at 1% of the total sale price. This TDS is deposited with the government by the buyer.

The seller is allowed to take credit of TDS in his tax return. But if the seller wants to invest his gains in another asset, his gains will be exempt from tax and TDS will be refunded.

Property transactions are planned in such a way so as to immediately invest receipts. Such taxpayers have to wait to file their return to claim refund of TDS deducted by the buyer.

For Example ,

if you have sold a property for Rs. 1 crore, TDS on it will be Rs. 1 lakh.

Even though you may have invested the gains immediately, TDS will be refunded only after your return has been duly submitted and processed by the tax department.

At the time of refund, interest is paid at 0.5% from April 1 of the assessment year where return has been filed within the due date. So your TDS earns an interest of 0.5% from April 1 of the assessment year, even though it may have been deposited by the buyer much earlier.

The income tax department should allow refund (by seeking the details of investment made) of this TDS, as soon as gains are invested.

Genuine property buyers are usually hard-pressed for funds when buying a property.

Several senior citizens who sell property to invest receipts in a better house, have a long wait before TDS is refunded to them.

Such a move will bring relief and cheer to honest taxpayers.

5.More taxes on capital gains from stock investments:

 There is widespread speculation that the Government, in Budget 2017-18, may introduce new rules for taxing capital gains from stock investments. Currently, there is no tax implication for gains made from stocks that have been held for a year. This minimum holding period, according to reports, 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% tax on stocks sold within a year; this may be increased to 20%.

CONCLUSION:-Like every other year not all expectations were met in the Budget speech of 2016 and these unmet expectations form the basis of our expectations from the Union Budget 2017. For starters, many experts were of the opinion that the tax exemption slab for individual tax payers would be raised from the current Rs. 2.5 lakhs level to a new level of Rs. 3 lakhs per annum. That of course did not happen, so this may be something to look forward to this year. 

Then there is the new player in the tax space to contend with as well – GST. The certainty about GST is that it will be introduced during the 2017-2018 fiscal. The uncertainty is whether it will be introduced in its current form which has polarised opinion or in a more watered down and less polarised format with amendments. Only time will tell and in 6 odd months we will have a definitive answer to these and other questions regarding Union Budget 2017.

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THANKS & REGARDS

CA SHIVAM GUPTA

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