Are you eagerly waiting for July 5th ? Yes, this is day the Finance Minister Nirmala Sitharaman would present the Union Budget 2019. Time to get your wishlist out and present it to the Finance Minister.
The NDA Government headed by Prime Minister Narendra Modi presented the interim Budget in February 2019. Now, under Modi 2.0 regime, FM Nirmala Sitharaman is going to present Union Budget 2019 on July 5th 2019.
Now, you and several taxpayers have a lot of wishes and expectations from Union Budget 2019. Let’s take a look at some of the important expectations in Union Budget 2019.
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You enjoy a tax deduction up to Rs 1.5 Lakhs a year under Section 80C of the income tax act. Certain investments like PPF, ELSS, SCSS, SSY, 5 year tax saver FD, employees contribution to EPF and some others, enjoy Section 80C tax deductions. You also get this deduction for home loan principal repayments, life insurance premiums and so on. This is a collective deduction up to Rs 1.5 Lakhs a year.
A tax deduction of just Rs 1.5 Lakhs a year under Section 80C is insufficient. It must be increased to at least Rs 3 Lakhs a year. This would encourage savings and investments as more people invest in PPF, ELSS and SCSS.
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This would be a great relief to home loan borrowers and those paying life insurance premiums.
The Modi Government is expected to re-introduce a Cash Withdrawal Tax (CWT). The Cash Withdrawal Tax would be levied if the total cash withdrawn from the bank is more than Rs 10 Lakhs in a Financial Year. This would promote digital transactions and check black money in the economy.
Recently, RBI waived charges on NEFT and RTGS to accelerate digital transactions in India. RBI has also formed a committee to review ATM withdrawal charges. So why all these new rules? The Government believes that bank account holders don’t need to withdraw more than Rs 10 Lakhs a year in cash for regular needs.
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The auto sector in India is desperately in need of a boost. The auto industry is facing a number of problems like rising petrol prices, poor consumer sentiment, rising insurance costs and the NBFC crisis which means reluctance to lend and the transition from Bharat Stage 1V to Bharat Stage V1 emission norms. The transition from BS 1V to BS V1 means a price hike of 10-15% in vehicle costs due to technology and safety enhancements.
A GST cut from 28% to 18% on passenger vehicles and two wheelers would be great in these troubled times.
Gems and jewelry contribute 7% to India’s GDP and 15% to total merchandise exports. Most of the gold ornament and diamond polishing takes place in tiny, small and medium industries. This is a lot of jobs and the small scale sector and exports sector is desperately in need of a lift. A rationalization of the GST structure could go a long way in boosting jobs in India.
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Boost to Startups and MSMEs: Several large companies take many months to process vendor invoices. This creates cash hurdles for startups and MSMEs as they have limited funds. The Government must make sure that all Companies disclose in half-yearly filing, any MSME payments which are pending for more than 45 days. This must also be applicable to Government Departments and PSUs which must pay all MSME invoices within 45 days of the invoice.
Startups and MSMEs have reported delays in TDS (Tax Deducted at Source) refunds. The Government must process TDS refunds within 45 days.
Startups and MSMEs want the Government to speed up input tax credit refunds. Input tax credit on GST means at the time of paying tax on output, you can reduce the tax already paid on inputs. Now, startups have higher input tax credits and lower output tax. Currently, input tax credit refunds for startups are not processed quickly. Startups want this to happen fast.
There is the 20% mandatory MSME procurement rule where 20% of all procurement in Government Departments must be done through startups. This is not being enforced. MSMEs and startups want the strict enforcement of this rule.
Change in Income Tax Rules:
The Government could widen the 5% income tax slabs from Rs 5 Lakhs up to Rs 10 Lakhs, 20% income tax slab up to Rs 15 Lakhs and 30% income tax slab beyond Rs 15 Lakhs. This would increase disposable income in the hands of citizens and as they spend, the economy enjoys a boost.
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