Union budget 2018-19 is set to be presented on 1st February’18 and this is surely going to be a challenging one for the government. As we know government took various bold steps like demonetization, goods and service tax now it is time again for them to prove their potential in this final budget before the general polls to be held in 2019.
Once the budget is delivered the most significant change everyone look for is the revision made in tax slabs. In the upcoming budget, citizens are expecting an increase in the limit of tax exemption. Recently a proposal was made to the finance minister for revising tax slab and increase the present limit of annual income of Rs 2.5 lakh to Rs 3 lakh.
Corporate bodies have started putting their expectations. A domestic company which distributes dividend has to pay Dividend Distribution Tax(DDT) on profit which is already been taxed at a high rate of 20.36% and investors are required to pay 10% income tax who receives dividend above Rs 10 lakh. From budget 2018 it is expected that government will withdraw this dividend distribution tax and tax on dividend income.
With governments vision to take India higher in the ranking of “Ease of doing business” it has been proposed that Income Computation and Declaration Standards (ICDS) should be removed. As an introduction to ICDS has increased compliance burden and it is required to maintain a parallel set of books of account compulsorily.
For the benefit of tax-payer government may introduce some changes in tax slabs. It is expected that limit of deduction on taxable income may get increased from its present level of Rs 1.5 lakh or limit of deduction available on interest component of housing loan may increase from its present level of Rs 2 lakh.
After implementing biggest indirect taxation in the country in the form of GST the government is expected to now move on direct tax as in last November center asked to reform the Direct Tax Laws. For this center has appointed a task force of seven members which will deliver with the direct tax laws in line with tax laws prevalent in other countries. These changes in direct tax laws are expected to bring much wanted relief to individual taxpayers.
Considering the difficulties which real estate developers are facing, with this budget government can either consider withdrawing the amendments made or increase the exempt period of one year.
Improving tax collection, reducing tax burden and removal of difficult processes should be the aim of government this year. Post demonetization and GST now it is awaited how the government will recover variations caused by it on present economic conditions of a country.