Budget 2020 Income Tax expectations: With less than a month to go for the crucial Union Budget 2020, the salaried class is expecting a major income tax relief from Union Finance Minister Nirmala Sitharaman. The hopes are high after the Narendra Modi government decided to go for a corporate tax cut in September 2019. While the middle class wants the Modi government to provide income tax relief, FM Sitharaman has a very little fiscal room to dole out such largesse, as per a PTI report.
The central government has been facing tough questions over the current economic situation of the country. Apart from this, the Central government’s decision to cut the corporate tax rate has dented its coffer by Rs 1.45 lakh crore. The government also took a bold decision of lowering Goods and Services Tax (GST) rates on items like outdoor catering, hotel accommodation, diamond job work, electric vehicle, and housing. Both of these rate cuts and shrinking consumption may translate into the shortfall in revenue targets, as per the news agency’s report.
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Fulfilling the demands of overseas investors, FM Sitharaman had rolled back enhanced surcharge on foreign portfolio investors levied in the full-fledged India Budget presented in July. The central government also withdrew surcharge on long and short term capital gains arising from the transfer of equity shares, PTI reported. The central government also decided to do away with the ‘angel tax’ for entities registered with the Department for Promotion of Industry and Internal Trade (DPIIT).
During the ongoing fiscal, the GDP growth rate slumped to a 6-year low of 4.5 per cent in the second quarter. The central government is battling with a six-year low economic growth as well as a 45-year high unemployment rate.
In the Interim Budget, presented in February last year, an income tax relief was provided that primarily benefitted individuals with an annual income below Rs 5 lakh. In another relief for salaried class, standard deduction of Rs 40,000, which was introduced in the Union Budget 2018, was raised by Rs 10,000 to Rs 50,000 per year.
The salaried class expecting big Income Tax relief in the upcoming Union Budget 2020-21 must keep in mind the above mentioned factors.
Source: Financial Express
