Saturday 28 January 2017

23 Jan, 2017 8:24p.m.
The much-awaited Union Budget for 2017-18 is expected to bring in some major changes to the tax framework for individuals and corporates following the demonetisation measure, a rating agency said today. 

Post-demonetisation, Budget is likely to be taxpayer-friendly. The upcoming budget will slash down the income-tax and corporate tax rates to boost consumption and investment that has been severely hit due to demonetisation.

We can expect a hike in tax-slabs from Rs. 2.5 lakh to Rs. 4 lakh for individuals, HUFs, etc., and from R3 lakh to R5 lakh for senior citizens.

Under the existing regime the tax treatment of NPS (National Pension System) is not on a par with the tax treatment of EPF (Employee Provident Fund) and PPF (Public Provident Fund). Under the existing regime, EPF and PPF have EEE (exempt-exempt-exempt) status. However, the NPS has EET (Exempt-Exempt-Tax) status, i.e, tax will be levied only at the time of withdrawal. This Budget may provide status of EEE to NPS at par with the status of EPF and PPF.

According to Care Ratings, the Budget on February 1 would be addressing issues with respect to "additional revenue garnered on account of the income disclosure scheme as part of the demonetisation drive and expenditure allocations based on the assessment of the economy as there appears to be a slowdown in growth post demonetisation", among others.

"The indirect tax structure will be largely on lines with the agreed principles of GST (Goods and Services Tax), which looks likely to be implemented from July 1, 2017."

Care Ratings estimates the Government to levy tax between 12 per cent and 18 per cent on services, depending on its classification based on essential and non-essential services as a move towards the final GST rate.
On the expenditure side, the revenue expenses in the next fiscal is expected to grow by 10-15 per cent from the level of Rs. 17.31 lakh crore in the current financial year on account of increased payments towards higher borrowings, interest rate subventions and implementation of the 7th Pay Commission and OROP Scheme (One Rank One Pension).

However, the report noted this increase in the expenditure heads could be offset to an extent by the lower subsidies on the fertilisers and food.

The budgeted expenditure towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) could be increased by 10 per cent for 2017-18, Care Ratings said.

1 comment:

  1. Thank you for sharing the good information ... Stay tuned to us for more information Tamilnadu Politics

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