The farm section has also been the focus of another RSS-inspired group, the Bharatiya Vitta Salahkar Samiti or a body of chartered accounts. This group is of the view that the government must tax agricultural income of high-net-worth individuals (HNIs). “There are 30 crore PAN card holders in India, but only 4 crore pay Income Tax. What’s the harm in taxing agriculture income of HNIs? To start with, the government can tax individuals with an income of over Rs 1 crore per annum. Those earning more than Rs 1 crore from agriculture should pay tax,” said Anil Gupta, chief of the Bharatiya Vitta Salahkar Samiti. However, this is not the first time that such a demand has been raised. The 2014 Tax Administration Reform Commission report stated that “agricultural income of non-agriculturists is being increasingly used as a conduit to avoid tax and for laundering funds, resulting in leakage to the tune of crores in revenue annually.”
When Finance Minister Arun Jaitley presents his budget, RSS-inspired farmers’ bodies will be looking out for three main things — an MRP-like pricing mechanism for farmers, tax relief for salaried class and steps to increase employability. An MRP structure for crops has been among the major demands of the RSS-affiliated Bharatiya Kisan Sangh for some time now. Speaking to News18, its national secretary Mohini Mohan Mishra said, “The government needs to cap the prices of vegetables and other farm produce. It is unfair that a farmer sells tomato at Rs 5 per kg, but the same it is sold at mandis (markets) for Rs 30. The cost rises to Rs 50 per kg by the time it reaches the consumer. A farmer purchases all raw materials at maximum retail price, but sells the produce at minimum retail price.”
CLICK TO READ | Arun Jaitley Faces Tough Task of Choosing Between Populism and Fiscal Prudence in Budget
New Delhi: Finance Minister Arun Jaitley will present arguably his toughest Budget yet on Thursday as he seeks to address agriculture distress, create jobs and boost growth while at the same time stick to fiscal prudence.
Payment of Gratuity Amendment Bill 2017 is also likely to be passed in the Budget session, which will make formal sector workers eligible for tax-free Rs 20 lakh gratuity. At present, formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving the job or at the time of superannuation. In what will strengthen the Centre’s revenue collections, experts are of the opinion that the government is likely to do away with capital gains tax exemption in the Budget. At the time of sale of any long-term capital asset, the gains are usually high and are currently taxed at 20%; the resultant figure, which is to be paid as tax, computes to be a very large amount liable to be paid as long-term capital gain tax. However, the government provides for an exemption if the taxpayer reinvests the amount in certain specified forms of investments and can thereby save long-term capital gain tax. Payment of Gratuity Amendment Bill 2017 is also likely to be passed in the Budget session, which will make formal sector workers eligible for tax-free Rs 20 lakh gratuity. At present, formal sector workers with five or more years of service are eligible for Rs 10 lakh tax-free gratuity after leaving the job or at the time of superannuation. In what will strengthen the Centre’s revenue collections, experts are of the opinion that the government is likely to do away with capital gains tax exemption in the Budget. At the time of sale of any long-term capital asset, the gains are usually high and are currently taxed at 20%; the resultant figure, which is to be paid as tax, computes to be a very large amount liable to be paid as long-term capital gain tax. However, the government provides for an exemption if the taxpayer reinvests the amount in certain specified forms of investments and can thereby save long-term capital gain tax.
Yet another sign of a tax relief was the Finance Ministry’s reply to Congress MP Shashi Tharoor that it would consider his suggestion to increase the tax exemption limit for pension up to Rs 5 lakh. Responding to a letter written by Tharoor in late September, Minister of State for Finance Shiv Pratap Shukla had said that the suggestion that pension up to Rs 5 lakh per annum should be exempted from Income Tax was examined. “The proposal would be examined during the exercise for the ensuing Union Budget 2018 and the outcome would be reflected in the Finance Bill, 2018,” said the letter, which was tweeted by Tharoor.
According to a report by the State Bank of India (SBI), with the rise in personal disposable income post the 7th Pay Commission, the Income Tax exemption limit needs to be raised by Rs 50,000 to Rs 3 lakh. The move will benefit around 75 lakh people, it said. The SBI’s Ecowrap report added that if the exemption limit of interest payments under housing loan is increased to Rs 2.5 lakh from Rs 2 lakh, it will benefit 75 lakh existing home loan buyers and cost the government just about Rs 7,500 crore. The government has periodically increased the Income Tax slabs from Rs 22,000 in 1990-91 to Rs 2.5 lakh in 2014-15.
While P Chidambaram had presented the previous UPA government’s vote-on-account in February 2014, Jaitley had presented a full Budget in July that year. The Budget for 2018-19 will be the first Budget post implementation of the GST regime. Even though independent India’s biggest tax reform of GST was implemented from July 1, the Budget for 2017-18 (April-March), had followed the practice of tax revenue projections under the heads of customs duty, central excise and service tax alongside direct tax numbers. With excise duty and service tax being subsumed in the GST, the classifications in the forthcoming budget may undergo change. While a new classification for revenues to be accrued from GST will be included in the Budget for the next fiscal, for the current year two sets of accounting may be presented one for actual accruals during April-June for excise, customs and service tax, and the other for July-March period for GST and customs duty.
Scrapping the colonial-era tradition of presenting the Union Budget at the end of February, Finance Minister Arun Jaitley had for the first time presented the annual accounts on February 1 last year. The Budget presentation was advanced by a month to ensure that proposals take effect from April 1, the beginning of the new financial year. Also, the nearly century-old tradition of having a separate Budget for the Railways was scrapped and merged with the General Budget. The Union Budget 2018-19 would be the last full Budget of the BJP-led NDA government before the 2019 general elections. As per the practice, a vote-on-account or approval for essential government spending for a limited period is taken in the election year and a full-fledged budget presented by the new government.
There have been mixed signals ahead of the Union Budget 2018-19 on deficit target, with Chief Economic Adviser Arvind Subramanian earlier this week stating that a pause in the fiscal consolidation plan can’t be ruled out while Niti Aayog vice-chairman Rajiv Kumar saying the government is likely to stick to the target. In the first eight months of 2017-18, fiscal deficit reached 112 percent of the target, stoking fears of a fiscal slippage. The shortfall was largely due to reduced dividends from government companies, which the government looks to bridge through stake sale in state-owned firms like HPCL.
Arun Jaitley has to manoeuvre all the expectations from the Union Budget 2018-19 within limited scope of tinkering with Income Tax rates given that central excise duty, which was levied on goods manufactured in the country, and service tax have both been subsumed in the GST and he no longer has the sole power to fix rates on them. Also constraining the Finance Minister would be the rise in global oil prices, which can stoke inflation as well as widen current account deficit. Some kind of incentives to boost exports of certain sectors may be announced while there may be announcements for start-ups as well as for promoting entrepreneurship.
However, hopes of relief in Income Tax rate or slabs were tempered by Prime Minister Narendra Modi, who lowered expectations of mass voter-swaying announcements when he indicated that Union Budget 2018-19 may not be resort to populism and that it was a myth that common man wants sop. This will be India’s first post-GST and is being keenly watched to see what Arun Jaitley does to boost growth in Asia’s third-largest economy. There are talks that tax break on capital gains from stock investments may go and it remains to be seen if Jaitley will finally show some movement on his 2015 promise to lower corporate tax rate to 25 percent from 30 percent over four years.
Income Tax relief, incentives for farmers and job creation will be in focus today as Finance Minister Arun Jaitley presents Union Budget 2018-19 at 11 am — the Narendra Modi government’s first post-GST and last pre-poll Budget. It’s arguably his toughest Budget yet as he seeks to address agriculture distress, create jobs and boost growth while at the same time stick to fiscal prudence. The Budget, in view of upcoming assembly polls in eight states and the Lok Sabha elections next year, may see new rural schemes and stepping up of funding towards existing programmes like MNREGA, rural housing, irrigation projects and crop insurance. With the recent elections in Gujarat indicating erosion of BJP’s rural vote base, Jaitley may also unveil incentives for the farm sector. Small businesses, which have traditionally formed the core support base of the BJP, too may get some sops to ease pain caused to them due to chaotic rollout of the Goods and Services Tax (GST) and demonetisation. There is also an expectation that common man may get some relief in Income Tax by way of a raise in the exemption limit.
Source: News18