Finance minister Arun Jaitley is set to present the country’s national budget for the next fiscal on Monday amid worries over the country’s stagnating growth rate, government finances and direction of reforms.
Here are five questions doing the rounds ahead of Jaitley’s speech:
1) WILL HE, WON’T HE?
Salaried individuals are hoping that the finance minister will raise the annual income tax (I-T) exemption limit from the current level of Rs 2,50,000. Jaitley had kept the limit unchanged last year. People are hoping for a repeat of what happened in 2014, when Jaitley raised the exemption level by Rs 50,000. Will he oblige?
2) SAVINGS INCENTIVE
Millions of Indians park their surplus funds in instruments such as public provident funds (PPF), post-office savings and equity-linked saving schemes (ELSS) of mutual funds to save on taxes. These are popularly referred to as “Section 80 (C)” instruments. The annual limit on such savings was last raised to Rs 1,50,000 from Rs 100,000 in 2014. There is a clamour to raise it further. What will the FM do?
3) FARM PUSH
Critics have often described the Narendra Modi-led NDA government, which rode to a landslide poll victory in 2014 promising to usher in ‘Achhe Din’, as ‘pro-corporate’ and ‘pro-big business’ at the cost of farmers’ interests. The government has been facing widespread criticism of ignoring rural India as farmers -- grappling with unseasonal rains, hailstorms, drought and debt -- were driven to suicide. What measures will the budget for 2016-17 announce to deal with the rural distress?
4) COSTLY SERVICES
Almost all services are now taxed at 14.5%. There is speculation that the finance minister will raise the service tax as a pre-cursor to the actual roll out the country-wide Goods and Services Tax (GST). A higher service tax, however, will pinch households. A visit to a gym or a beauty parlour will get costlier. Likewise, telecom services, too, could get costlier. What does the FM have in store?
5) MARKET MOVES
India’s stock markets have plunged 11.5% since January 1, pummeled by choppy external conditions and an industrial deceleration in China. A cut in corporate income tax rates along with reduction in exemptions is unlikely to affect markets, as this was announced last year. Markets will be keenly watching for details on clarity on retrospective taxation and measures on levies on capital gains. What are the markets going to experience on Monday?