The union budget 2017 is being seen from a different point of view. This time, expectations from the budget are different. The reasons for these differences are demonetization, merger of Railway budget with Union budget, expected application of GST bill, and the inclusion of Vehicle bill with the union budget. By keeping all these changes and differences in main view we have analyzed the expectation of various industries from the budget 2017.
1. Real Estate
Demonetization of the currency had impacted the sale in the market as potential customers kept on postponing their buying decisions, waiting for a fall in the property and product prices. This has aroused an expectation among realtors that Government should initiate some confidence-boosting measures in the upcoming budget, which will put more money in people’s pocket, and that itself will bring back home sales to pre-demonetization levels. In doing so, some cut in the tax rates for middle-income groups will be the most expected measure. It is reasonably expected that cuts in income tax rate, and possibly in stamp duty for home registration could be measures that may help the real estate industry in getting a jump-start.
Realtors also expect the government to motivate affordable housing in a planned manner to prohibit proliferating of slums in the big metros where the infrastructure is getting expanded. Still, Real Estate Investment Trust ( REITS) has not taken off as anticipated and planned by the Government. Improvement in its planning is also expected by the realtors.
The idea of smart cities is bringing in lots of opportunities for private developers. So they are expecting the government to further liberalize norms and allow FDI in construction and affordable housing apart from re-introducing tax benefits under section 80 IB (10) of the Income Tax Act.
In recent years, the use of technology has consistently increased. This has contributed to the rapid growth of E-commerce in India. Some state government has demanded that is the tax rate to be hiked to 14.5%, even as VAT on most goods which are sold in E-commerce websites like mobile phones, computers, clothes and consumer electronics is 5%, to discourage web-based shopping that takes place cutting across state borders. The rise of E-commerce has created the need for modification of tax structures.
For example, a consumer (other than a registered dealer) based in Bhopal, could buy a laptop from a dealer in his city but stored by Flipkart in its Bengaluru warehouse and the tax revenue goes to Karnataka. Such incidences are on the rapid rise so the tax increase will require an amendment to the Central Sales Tax Act. Apart from these expectations, the amendments on the laws related to E-commerce are expected to be passed. This bill is expected to facilitate the rules and regulation for E-commerce industry in the country.
The first expectation of Life Insurance Industry is that tax relief should be linked to the term of the policy instead of sum assured. This means that tax relief should be given to a proposal where the term of the policy is more than 10 years. This would help in promoting long-term savings habit and benefit the persistency ratio of life insurance companies.
And, Section 10(10D) provision should be precisely revised in line with the minimum assured death benefit guidelines prescribed by IRDAI. The insurance experts believe that government should also look at special tax concessions for long-term saving instruments and should not be collaborated with the existing tax limits. This will encourage a habit of consistent and systematic long term savings which is the need of the hour.
4. Technology sector
The Technology sector has many expectations from Union Budget 2017-18. One prominent expectation is that Budget is expected to deliver on providing investments in India’s technology infrastructure. A substantial amount of budget would be needed to develop a stable network infrastructure across the country to lay a foundation for India’s digital economy. Union Government’s initiatives such as smart cities, digital India, and skill India need the construction of technological infrastructure that will need budgetary support.
5. Manufacturing sector
Manufacturing sector industry, mainly MSMEs, are expecting a boost in the budget allocation from the union government. There are expectations from the Government’s ‘Make in India’ campaign that focuses on job creation and investment promotion in many sectors.
6. Solar Power
The expectations of solar power industry from the union budget are several. One expectation is that solar power equipment such as UPS, solar invertors, charge controllers should be brought under zero VAT/VAT regime similar to solar panels, all across the country. Another expectation is 80 percent enhanced benefits should be extended to individual taxpayers as well for installing rooftop solar systems and other solar energy equipment.
There is a demand that Retail lending facility through commercial banks for buying solar energy equipment should be made as easy as getting a consumer loan and interest paid on loans used for solar energy systems should be allowed as deduction from income while arriving (at) income tax for individual taxpayers as well.
7. Automobile sector
SIAM is an automobile industry body which is expecting a reduction in excise duty on automobiles to support the sector to combat the slowdown in the demand of automobile products after the demonetization. Union Government is also expected to consider proposals to give incentives to manufacturers of electric and hybrid vehicles to make them cheaper.
The other expectation is the government is considered to take steps to increase the disposable income of the customers and improve the overall economy. The automobile industry is also expecting concrete policy on fleet modernization, especially of commercial vehicles and passenger vehicles.