Lower Fees, Cheaper Gadgets, Jobs: Young India’s Budget Expectations
New Delhi: Curtailment of education fees, cheaper electronic gadgets and more focus on jobs are some of the expectations Young India has from the budget for fiscal 2017-18 that Finance Minister Arun Jaitley will table in parliament on Wednesday.
Many students and professionals whom IANS spoke with said they wanted a youth-oriented budget that will help underprivileged students pursue higher studies and cheaper electronic gadgets to make the government’s Digital India initiative a success in a country where almost 47.8 per cent of population is currently aged below 29.
With India set to account for 20 per cent of the world’s workforce in the next three years, many young men and women wanted the government to largely focus its resources on how to positively channelise the energy of the youth and make them more productive.
Ankit Mishra, a student pursuing MBBS in Varanasi, said: “I want the government to announce something that can benefit students. It is very difficult for many students who are not privileged to afford higher education fees.
“The fee structure should be normalised. Many times, brilliant students do not study further because of financial issues. That should remain the focus for Arun Jaitley,” Mishra told IANS.
Alok Singh, a banker, expected the government to curtail taxes and present a “people-friendly” budget.
“It all depends on the taxation part. The government should seriously think about the common people now. The taxes on everything are so high that one is deprived of basic necessities at times. Already, commoners have suffered a lot due to demonetisation. This time, it should not add to their problems,” Singh, 28, said.
With the Prime Minister Narendra Modi-led central government’s agenda of making the country digital and go cashless, some expected Jaitley to make gadgets affordable.
“Since the government itself is campaigning for Digital India, it should cut down the prices of electronic appliances, including mobile phones,” Mohit Sharma, a Delhi University student, said.
Finance Minister Arun Jaitley is widely expected to announce in his Union Budget 2017, income tax sops to spur consumption in the economy, which has been hit by demonetisation. The Finance Minister will present the Budget on Wednesday, February 1, and markets and industry also expect him to make announcements to stimulate growth. “The government’s fourth budget is likely to make a sweeping recast of direct taxes to give a boost to the economy following demonetisation,” said Soumya Kanti Ghosh, group chief economic adviser of State Bank of India, in a report.
Here Are 10 Tax Changes That Could be Announced, Experts Say
- The income tax exemption limit for persons below 60 could be hiked from the Rs 2.5 lakh currently, say economists. But the estimates vary widely – some economists say that the limit could be raised to Rs 3 lakh. On the other hand the government should double the basic exemption limit to Rs 5 lakh per year, says an EY survey said. Mr Jaitley in the 2014 Budget had cheered the salaried class by raising tax exemption limit to Rs. 2.5 lakh from Rs 2 lakh.
(Read: Income Tax Cut Hopes Rise. How Much Can Be Saved If Exemption Limit Is Doubled)
- But SBI does not expect a change in tax rates. If the exemption limit is hiked to Rs 3 lakh, the 10 per cent rate would be applicable for income between Rs 3 lakh and Rs 5 lakh, with the rest remaining the same, SBI says in the report.
- In last year’s Budget, Mr Jaitley had allowed an additional deduction of Rs 50,000 under Section 80CCD (1) for investment in National Pension Scheme or NPS, which resulted in total deductions of Rs 2 lakh under Section 80C and Section 80CCD. With the overall savings rate declining, there is a need to increase this deduction by Rs 50,000 to Rs 2.5 lakh, say economists.
SBI expects the government to increase the exemption limit of interest payments under housing loan to Rs 2.5 lakhs for existing home loan buyers also from the current level of Rs 2 lakhs. There are around 75 lakh home loan buyers in the country, so the increase in home loan interest deduction from Rs 2 lakh to Rs 2.5 lakh will benefit them.
Economists are also watching whether Mr Jaitley will hike the service tax (currently at 15%) to align with the goods and services tax (GST) regime. “It will be interesting to see whether the finance minister chooses to hike service tax by 1 percentage point in order to align it with the GST,” says SMC Securities in a report. Rajesh Baheti, MD of Crosseas Capital Services, says Mr Jaitley is unlikely to tinker much with the indirect taxes (excise duties) in the Budget as government has set July 1 date for rolling out the GST regime.
(Read: Get Ready To Pay More For Dining Out, Air Travel, Phone Bills)
- Brokerage Edelweiss expects that tax-savings infrastructure bonds could make a comeback. These bonds had earlier allowed investors get additional tax deductions. The fund raised would be used for financing highway and railway projects.
The bank also in the same report said that the lock-in period for tax savings bank fixed deposits be reduced to three years from the present five years.
Incentivising digital payments could be a key focus area in the Budget, says Edelweiss. Sops for incentivising digital payments could see a meaningful increase in the Budget, it says.
Market observers would be closely watching if the government makes any changes to the tax regime on investments in equities. Under the current regime, gains from transactions in shares held for less than 12 months are considered short-term capital gains and are subject to 15 per cent tax. Gains on holdings above 12 months qualify for long term capital gains benefits and are exempted from tax. Any move to end tax breaks on equity gains may turn sentiments sour towards the capital market, say analysts. Jyotivardhan Jaipuria, CEO of Veda Investment Managers, said possibly the 1-year limit for long term could be changed to two years but the tax rate is likely to be kept at zero.