Everybody wants everything. The challenge for finance minister Nirmala Sitharaman's first budget is to give everybody something. Here is a look at some common demands from across the country from Modi 2.0 government's first budget.
Lower tax rates: After the Donald Trump administration in the US reduced corporate tax rates from 30 per cent to 21 per cent, there has been a clamour for similar steps in India. While industry bodies like Confederation of Indian Industry (CII) want the corporate tax rate to be slashed from 30 per cent to 25 per cent, others like Federation of Indian Chambers of Commerce & Industry (FICCI) want the highest tax rate to be no more than 18 per cent.
Dividend Distribution Tax (DDT) Issues: For corporates, there are suggestions that the DDT be reduced from 20 per cent to 10 per cent. FICCI says, “All dividends on which DDT has been paid, be allowed to be reduced from dividends irrespective of the percentage of equity holding keeping in mind that investment companies which do not necessarily have subsidiaries as they invest in various companies in the open market, be also made eligible for such benefit.”
Personal tax: People, who commented on the online forum seeking suggestions for the budget, have wished that minimum exemption for income tax purposes be raised to Rs 5 lakh from Rs 3 lakh at present. But industry bodies like FICCI have advocated more for high net worth individuals instead of the common man. They have demanded abolition of 10 per cent and 15 per cent surcharge imposed on incomes above Rs 50 lakh and Rs 1 crore respectively. But others like ASSOCHAM have articulated raising the exemption limit to Rs 5 lakh.
Rs 2 lakh cash limit: Industry bodies have demanded that the government’s rule that prohibits cash transactions above Rs 2 lakh should be modified to exclude Non-Banking Financial Companies (NBFCs) from its ambit. Others have articulated doing away with multiple regulators in the financial sector and instead have a single regulator for the entire financial services sector.
Land reforms: Industry groups have asked for sweeping land reforms in India that allows for land aggregation and private sector investment in agriculture. Several states in India at the moment do not allow for land leasing. But the practice continues despite these bans across India. Stakeholders have called for a more unified approach for implementing land leasing reforms across all Indian states.
Export incentives: While India’s export industry hasn’t performed empathetically, there are suggestions to provide enhanced incentives to boost the export sector. All export incentives and export credit initiatives need to be made WTO compatible. FICCI points out that incentives provided by China to its exporters can go up to almost 17 per cent of the total value of exports. India too needs to provide similar benefits to boost its exports.
Interest rates: While the common man has asked for higher interest rates for savings accounts representatives of financial sector have also made similar demands. In addition financial sector representatives have asked for review of banking NPAs provisions through setting-up a Committee, enhancing financial literacy programmes and funding, incentivising agricultural marketing, setting-up of Debt Exchange Traded Fund, domestic capability building in Audit & Credit Rating, making available trade licence online for MSME sector, provision to ease liquidity pressures created due to insolvency and rationalisation of various taxes like Security Transaction Tax (STT) in capital market.
Agriculture sector: While many ordinary people in the comments forum have demanded an income tax on agriculture representatives o the agricultural sector have suggested ways to boost income. These include solar energy to be treated as third crop to augment income of farmers. Incentivising and popularising usage of organic manure for improving carbon content in soil, increasing investment in micro irrigation and solar pumps, financial incentives to the states for implementing agricultural market reforms and promoting start-ups in agriculture.
Healthcare: While many common citizens have asked for tax exemptions on healthcare for the elderly, industry bodies like FICCI have made some radical suggestions. These include raising tax exemption on preventive health check-ups from Rs 5,000 to Rs 20,000, raising medical reimbursement limit to Rs 1 lakh from Rs 15,000 and providing capital subsidy for investments in the healthcare including setting up dedicated funds for building more hospitals by providing easier access to capital for such expansion.
Education: Some common-man demands include regulation of private school fees and other arbitrary fees imposed by higher educational institutions in the private sector. Industry groups like FICCI have demanded Rs. 10,000 crore per year allocation on making smart device available to each student and teacher free of cost under Sarva Siksha Abhiyan, Rs. 5000 crore public spend over 3 years to set up National Science, Humanities, and Technology Research Foundation to fund research, tax breaks to corporates which nominate their employees for higher education either through the continuing education model or a full-time program and greater freedom for higher educational institutions to set up overseas campuses with a $500 million line of credit extended by EXIM bank for the same.