It is said that “there are two sides to every story”, and it surely applies to this year’s Union Budget. When Finance Minister Mr. Arun Jaitley delivered his first full fledged Budget, analysts and experts are out debating its overall sentiments. While some feel that it is reform oriented, with a roadmap for the future, others have been left disappointed with the lack of big ticket announcements. Here are seven things we feel that the Annual Budget missed out on.
- Increase of the Tax Exemption Limit: The most obvious thing the average taxpayer looks for in a Budget is tax deduction. This year’s Budget left this untouched unlike the previous one. ‘Tax the rich and spare the poor’ sounded well when it came to abolishing the wealth tax, but the common man, especially the middle class got no real relief from the Finance Minister.
- No Announcement for Non-IIT/AIIMS Educational Institutes: Every year there is some big Budget announcement for the premium educational institutes like IITs, IIMs and AIIMS. While they are the pride of India, a common student with a not-so-brilliant academic record needs access to more than IITs and IIMs to get a decent higher education. The Budget speech this year, like the previous years, focused only on big-ticket announcements rather than including facilities for the common student or some relaxation in terms of education loans.
- Countering Increased Spending due to Service Tax Increase: The one unwelcomed aspect of the Budget is the increase in the Service Tax rate from 12.36 to 14%. While economic experts believe it was justified as the government needs to earn more revenues, the common man was left with no compensation to balance the added burden. With inflation just about subsiding and the common man feeling a sense of relief from the high prices, an increase in Service Tax means increased expenses on several fronts, which may bring the middle class back to square one.
- Lower Interest Rates for the Manufacturing Sector: There has been so much talk about ‘Make in India’ and promotion of Small and Medium Enterprises in the country. But raising working capital and other business loan continues to be the biggest roadblock in the progress of the MSME sector, especially with manufacturing. Various industrial chambers were hoping that the Finance Minister would announce certain banking reforms, whereby small-scale manufacturing units would get easier loans, especially for working capital and business expansion. With no such announcement in the Budget, save the MUDRA initiative which targets only a subset of the manufacturing industry, the MSME community has been left disappointed.
- FDI in E-commerce: The e-commerce segment really took off in the last Financial Year, and there was a great opportunity to take a call on the increasing FDI norms in the e-commerce space. There was a strong undercurrent in the last Annual Budget that the Government may consider a 100% FDI in online retail, but the announcement never came. The Indian e-retailers were hoping that the current norms of allowing only 51% foreign investment under a single brand retail would be reviewed. With GST still at least one year ahead and VAT ruling the roost, the average e-trader has been left disappointed.
- Increase in Tax Deductions under Section 80C: If the Finance Minister had asked the common man for one wish before his Budget speech, an overwhelming majority would have suggested an increase in the tax exemption limit under Section 80C. This section is already overcrowded with a number of investment options, but the maximum limit of Rs. 1.5 Lakhs was largely expected to be revamped to usher in taxation reforms, especially in absence of a tax slab change.
- No Tax Sops or Depreciation benefits for the Businessmen: Self-employed individuals who were eagerly looking towards the Finance Minister for low lending rates were further disappointed with zero increase in the depreciation benefits. Indian businessmen are not only in serious competition with their Chinese counterparts but also face high costs of machinery, labour and raw materials. There was also no announcement of any tax sops for any specific sectors, rendering the Budget a hot cup of tea without sugar for India’s small business owners.