As Finance Minister Arun Jaitley has locked his staff inside the ministry as per the tradition to prepare the budget, indications and hints from several quarters over the period suggest several impending decisions to be announced in the budget for 2015-16.
Here are 6 top proposals which we can expect:
Subsidy: While the global oil prices are easing the import bill, the hike in excise duty is likely to fill the deficit by Rs.20,000 crore this year. But never expect any benefit to be passed on to the consumer as the government wants to address the current deficit situation first. It means, no reduction in LPG gas cylinders, no fuel subsidy and no reduction on excise duty on household items this year. India’s fuel subsidy accounts for a quarter of the total subsidy amount of nearly Rs.2.6 trillion. It is also time the finance minister may unveil a roadmap to bring down subsidy to 1.5% of GDP from the current level of 2.3% in phased manner.
Service Tax: Service tax is the easiest mode a finance minister picks when his intention is to tax the middle class, especially the service sector or salaried section. Continuing the tax slap on diners in five-star restaurants initiated by P. Chidambaram, Arun Jaitley may broaden the move to include the entire service sector increasing the tax to 14 per cent from the current 12 percent. This is in tune with the implementation of the Goods and Services Tax (GST) from April 1, 2016.
Income Tax: The salaried class may not benefit much from the post-election year budget as their turn to be heard is still four years away. Arun Jaitley may not mince words not to exempt the tex relief which is currently at Rs.2.5 lakh. As hinted by former finance minister and BJP senior leader Yeshwant Sinha, the budget 2015-16 may also see the introduction of Direct Taxes code in a mild way. “It is ready and cooked,” said Sinha, which means companies and individuals will have to pay more taxes this year onwards.
Housing Sector: The housing sector has been lobbying for years to give more exemptions to give it a boost and housing loan interest exemption may go up to Rs. 3 lakh from Rs. 2 lakh now. This can be gauged in view of property prices in the country steeply reaching the skies. But it was hiked to Rs.2 lakh from Rs.1.5 lakh the previous year.
Disinvestment: Another major policy direction to come from this year’s budget will be related to disinvestment, especially in the banking sector and allied government-owned enterprises. As banking employees are already on strike, it is not surprising to see that dilution of residual government shares in banking and PSUs will be hastened in the budget.
Swachch Bharat Tax? Going by the high-pitch movement all over the country, the budget this year may see everybody shelling out by at least 2% something called ‘Clean India’ tax. The scene was already set and few leaders and individuals can object to it as they are all part of the Prime Minister’s “Clean India” campaign.