'Budget 2019 should reduced Corporate Income Tax rates'

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Mustafa Nadeem, CEO, Epic Research

The budget is likely to be what was presented back in the Interim Budget session. Though there are some expectations which various industries need at this point in time. For taxpayers, the standard deduction can be reduced to 40000 while Tax exemption is seeking up to 5Lac. First and most important is the liquidity crunch that is seen in the industry with the rising cost of capital resulting in a slowdown in the economy. – Despite the rate cuts we are seeing a lag effect in passing on to the benefit to the industry and hence the benefit is not seen.

The distress in rural demand and ongoing agrarian crisis is taking a toll on a sector that is directly or directly giving 50% employment to the economy. Hence a real impact is to be made here.

The DBT, Waivers, and Increase in short term loans up to Rs 1 Lac without interest for five years are some of the promises government made. Hence a more detailed view and its implementation are important. In fact, it is critically important.

GST leakages should be sought out. Since there cannot be much change in tax slab, only if industry demands, we believe this would improve the GST collection numbers.

Rules and Laws should now encompass a broader base to increase the GST numbers so that the government is able to improve its spending as it’s now needed to revive the economy. Improved spending from the government would entail the private sector to get some boost Bank recapitalization should be done aggressively and faster. There is also consolidation needed in this space with mergers and acquisitions. These are to be done faster and with that recapitalization would improve the ongoing liquidity crunch and ease the MSME space. This would also improve the private investments. Since the mandate is much bigger than 2014, hence, the expectations have also increased.

 

Amit Gupta, Co-Founder, and CEO, TradingBells

One of the most important expectations from the upcoming budget for the investor community, in general, would be that the reduction in Corporate Income Tax rates. The government reduced the rate to 25% for MSMEs last year, the same can be extended to the entire corporate fraternity. watching out for is the fiscal deficit target which the government sets for the coming year are another important metric for the investors. Last year it was set at 3.4% and if this is raised in the upcoming budget, it would not be good news for the markets as it may have a direct impact on the currency as well as the government bond yields. A rise in bond yields would reduce the chances of RBI cutting interest rates any further this year thereby contracting the liquidity in the markets. 

Securities Transaction Tax has been high for a long time and the investors are waiting for this to be brought down. Lowering it will be very positive for the domestic stock markets. The government has taken a target for homes for all by 2022 and we can expect further reforms for the affordable housing segments this time. They may also focus on divestment for some of its entities such as BEML, Air India, etc. It may announce more CPSE ETFs launch in the near future for this purpose. Renewable energy sources such as Electric Vehicles could get a boost in the form of tax exemptions. Reducing the corporate income tax rates to at least 25% would be a welcome move

If the Finance Ministry decides to raise the tax rates on long term capital gains (LTCG) once again this time. This could create a negative sentiment amongst the investor community and may impact the markets negatively.

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