The middle-class is expected to get some tax relief but sops for farmers look unlikely this time.
New Delhi: The Budget 2020-21 is likely to provide more relief to India Inc and small business houses by relaxing several strict laws. The middle-class is expected to get some tax relief but sops for farmers look unlikely this time.
The government aims to allay corporate India’s fears about harsh laws that lead to heavy penalties and years of jail for violations, and encourage companies to invest more to help the economy achieve the $5-trillion target by 2024, a top source said.
“In a move to encourage Indian companies to invest more in both domestic as well as international firms without any fear, a slew of reforms, including in taxation, are being considered to be undertaken by the government in this budget,” the source said.
It is, however, learnt that noteworthy sops for farmers are unlikely in the coming budget announcement. “As the government has hiked the minimum support price of kharif and other crops several times for farmers in its first term, they may not get any further relief this time. Besides, the government is mulling other mechanisms to increase their farm income,” the source said.
But traders and businesses engaged in agricultural commodities may be spared harsh punishment for offences.
A complete dilution of several provisions, including the clause of imprisonment, of the Essential Commodities (EC) Act is on the cards, as recommended by a high-level government panel. This may be a move to alleviate fears among traders dealing with essential goods.
As per the source, a high-level committee has already recommended doing away with imprisonment related provisions under Section 7 of the EC Act. By this section, if a person is found guilty of controlling production, supply and distribution of essential commodities, he will invite imprisonment of three months, extendable up to seven years.
The Budget may also provide relief on short-term and long-term capital gains (STCG & LTCG) tax on equity shares. At present, profits on equity shares sold within one year from the date of purchase attract STCG tax of 15 per cent and profits on shares sold after one year attracts a LTCG tax of 10 per cent plus cess. “The draft for providing relief on long-term capital gains is in the pipeline and may provide relief to mutual funds, venture capitals and on equity and non-equity investments. Some relief may also be provided on STCG,”.the source said.
Considering the high of cost living due to rising prices, there may be a rejig of the personal income tax slabs, too.
“The government may consider increasing the minimum slab limit for the amount not chargeable to tax from Rs 2.5 lakh to Rs 5 lakh. The limit was last raised in Modi’s first budget six years ago,” it said.
“Similarly, the slab rate of Rs 10 lakh for levy of the highest tax rate of 30 per cent, can be increased to Rs 20 lakh. This may be accompanied by a new slab for Rs 10 to 20 lakh at a 20 per cent tax rate and the 10 per cent tax rate could be re-introduced for the Rs 5 to 10 lakh income slab,” the source said.