Income Tax cuts, concession for home buyers likely in Budget 2020
New Delhi : India's annual budget is all set to be revealed today (Saturday) in the Parliament by Union Finance Minister Nirmala Sitharaman. It is also PM Modi's second opportunity in seven months to refresh policy priorities to support an economy on a downward spiral.
In Budget 2020, it is expected that there will be higher spending in rural areas and possible tax cuts.
Sitharaman has had to contend with weaker tax revenue as the economy slowed, and lower-than-expected income from assets sales. She may be forced to borrow more and tap the Reserve Bank of India for more dividends to help finance the budget.
According to a news report, Bloomberg experts have predicted that the government will be missing the Fiscal Deficit target for one more time. As per prediction Sitharaman will also widen next year's target to 3.5 per cent of GDP, even though a law on fiscal discipline mandates the government must narrow the shortfall to 3 per cent by then.
The government will probably boost borrowing to fund the wider fiscal deficit, with a Bloomberg News poll estimating likely bond sales of Rs 7.8 lakh crore ($109 billion) for the year starting April. That would be higher than Rs 7.1 lakh crore budgeted for the current year.
Talking in terms of Income tax, some analysts have predicted that there will be more tax cut to help support businesses and consumers.
Here are some possible changes:
Tax rebates on home purchases: an increase in this measure would have a large multiplier effect for both employment as well as consumption, according to Edelweiss Securities Ltd.
Cuts to personal income taxes, long-term capital gains, tax on share buybacks: Bank of America said this would help spur demand.
Tax relief for individuals, minus exemptions as proposed by the Direct Taxes Code, would result in a net gain for the government, according to ICICI Securities.