Budget Event_The 3 Key Traits of India Budget_February 2017
India has spelt out its agenda of ‘transform energise-clean India’ while making various key policy announcements.
dubai — With the 2017-18 budget, the Indian government has sp el tout its agenda of“transform en ergi se-clean India” while making various key policy announcements that would have far reaching implications on rural, agriculture, housing, digital and infrastructure sectors, financial experts and economists said.
Overall, the focus of the government through the budget has been to give major fillip to the rural economy while stepping up public investments to override the impact of demonetisation and revive growth, budget commentators said at a seminar organised by the Institute of Chartered Accountants of India (ICAI) Dubai on Saturday.
“Even in the lower strata of society, things are moving to being digital with small vendors also starting to accept digital payments”, said Kamlesh Vikamsey, past president of the ICAI and senior partner at Khimji Kunverji & Co, as he dwelt on the significant highlights the budget including capital gains tax and tax slabs.
“The budget came in the backdrop of significant events such as the US elections and demonetisation in India. The theme of the budget was transform India, energise the investing sector and clean India, including the digital push and attacking black money,” Ajit Ranade, president and chief economist of Aditya Birla Group, said at the technical seminar “Analysis of Indian Union Budget 2017 – Budget of Evolving India”.
Panelists also included Mayur Batra, managing director of Mayur Batra Group, and Pankaj Mundra, chairman of ICAI Dubai. Sunanda Jayseelan of ET Now moderated the session.
“The budget focuses on development and advancement of ‘Digital India’,” signalling a shift from an informal to a formal economy as the government seeks to represent itself as custodian of public money. “In this regard, the government has set up a target of ₹25 billion digital transaction for 2017-18 through various digital applications and debit cards besides introducing several provisions to move towards a cashless economy,” said Batra.
Panelists said budget proposals were aimed at stimulating growth, providing relief to the middle class with tax cuts and affordable housing, curbing black money, bringing transparency in political funding, simplification of tax administration and expanding the tax net.
While relief has been provided to small taxpayers by lowering the tax rate to five per cent for individuals in the income bracket between ₹250,000 and ₹500,000, for corporates with a turnover of up to ₹500 million, the tax rate has been reduced to 25 per cent. Such measures will help bring a broader segment of the population in to the personal income tax net while encouraging small and medium businesses, analysts pointed out.
The change in tax slab means tax savings of up to ₹7,700 for people with taxable income between ₹300,000 and ₹500,000. And for individuals with taxable income between ₹500,000 and ₹5 million, tax savings of Rs12,900.
Taxpayers who do not file their returns on time will have to shell out a penalty of up to ₹10,000 from assessment year 2018-19. However, if the total income of the person does not exceed ₹500,000, the fee payable under this section shall not exceed ₹1,000.
According to tax experts, the budget proposed a number of changes that will attract lower tax on gains from property sale. The holding period of a property for qualifying as long-term gains will get reduced to two years, from three years currently.
According to the current tax norms, if a property is sold within three years of buying, the profit from the transaction is treated as short-term capital gains and is taxed according to the slab rate applicable to the person.
The budget has also proposed measures for promoting affordable housing and boost tax exemptions for the real estate sector. The budget has announced that 10 million rural houses would be created by 2019 while increasing the outlay for rural housing to ₹230 billion from the previous ₹150 billion. This will help address the housing needs of the homeless and those living in kachha houses in rural areas, and potentially help reduce pressure on urban areas if it is in conjunction with employment generation.
By giving affordable housing infrastructure status, the government, which targets housing for all by 2022, seeks to ensure that cheaper loans are available for developers of budget housing. Affordable housing has seen a significant change in the government’s existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30sqm and 60sqm for projects within the municipal limits of the large four cities.
The total allocation for infrastructure at ₹3.96 trillion in 201718 “is very good news” for the real estate sector, as the correlation of infrastructure with real estate growth is a well-established fact, analysts pointed out.