The first post GST budget of India will be the Union Budget 2018-19, that is most likely to be presented on 1 February 2018 by Finance Minister Arun Jaitley. This will be the last full budget before the general elections of 2019. On 30th January 2018, the budget session is expected to begin. The new President of India, Ram Nath Kovind will address the joint session of both the houses. Economic Survey will be presented 31st January 2018. In the tenure of Modi Government, this will be the fifth budget presentation. There are various sectors, which are expecting high from the new arriving union budget of India. Let us have a glimpse of the expectations from this new budget;
Expected Impact on Tax Structure
In 2017, the indirect tax structure of the country was given a facelift with the new Goods and Services Tax regime. Thus, in the new Union Budget 2018, it expected that there will be changes in the direct tax structure including income tax. Modi government speaks out that the tax base in the country needs to be widened to curb tax evasion. There is also a need for rationalization of the tax rates. A task force has been created by the government, to review the existing structure of direct taxes in the country and the related exemption norms. This is headed by CBDT member Arbind Modi. Behind this step, there is an ideology to make direct taxes more contemporary so that it matches the present necessities.
Expected Impact on Infrastructure
In the forthcoming Union budget 2018, infrastructure is expected to be a priority. The Finance Minister, Arun Jaitley has stated that the government is looking to maintain the momentum at which new infrastructure is being developed in the country. Thus, the new budget is expected to put the impetus on developing rural infrastructure. The government has given green signal to the biggest ever highway development plan, under the Bharatmala project. Another expectation from the arriving budget is that there will be a discussion about urban infrastructure, housing, water and sanitation needs. Since the government has merged the Railway Budget with Union Budget, so the railway infrastructure will be another important topic to be discussed in the houses. Experts believe that there is an urgent need for investment in railway infrastructure along with the framework of stations and trains.
Expected Impact on Recapitalization of Public Sector Banks
In October 2017, the government announced a mega recapitalization plan to counter the rising bad loans of public sector banks. It was worth of Rs 2.11 Lakh Crore. Out of this amount, Rs 1, 35, 00 crores will be in the form of front-loaded recapitalization bonds. However, yet the details on the types of bonds is not shared by the government. In the upcoming Union Budget, it is expected that the government will raise around Rs 70,000 crore for the same plan.
Expected impact on equity markets
When we consider the last few years as a precedent, then you can summarize that the Sensex would appreciate in the month after the budget. From 2010, the Sensex has gone up six times out of nine in the month after the budget. However, it should also be remembered that the benchmark index has also fallen eight out of nine times during the month prior to the budget.
Expected impact on Leather industries
Soon, in the Union Budget 2018- 19, the government will be announcing an incentive package for the labor-intensive leather sector. To boost the segment and generate new jobs, the package of Rs 2600 crore will be announced. To set up mega leather clusters in the country, the commerce and industry ministry has asked its finance counterpart to give financial assistance.
Expected impact on automobile industry
One of the important sectors that play vital role in Indian Economy is Automobile Sector. The Society of Indian Automobile Manufacturer’s expectation is that all passenger vehicles should be kept under two tax rates under the GST vs. multiple tax rates. The automobile industry is also expecting from the Modi government for tax on used cars to be fixed. The tax should be fixed at 5% on the differential value between sale and purchase price. Currently, GST framework levies tax rate between 28% and 43% on dealer margins, depending upon the type of vehicle.